Blaine: Joining me today is Leif Elgethun, CEO and founder of Retrolux. Leif is a serial entrepreneur who has focused on building and scaling clean energy companies. Leif is also president and co-founder of the Idaho Clean Energy Association.
Leif, thanks for joining me today.
Leif: Hey! Thanks Blaine! Really happy to be here and really excited not only to share a little bit about Retrolux, but most importantly explore how lighting systems, other operational technologies in the built environment are quickly going to more of an informational technology: driving the Internet of Things, providing the infrastructure backbone, and in many cases, doing things that are really important to me personally like reducing energy costs for our customers. So, all really fun stuff that I look forward to sharing with your viewers. p^Blaine: Excellent. Well, we’re going to dive into all of those topics. I know you and I have met a few times at various conferences focused on digital transformation, generally. And we’ll touch on that as well in a bit.
But first, tell us a little bit more about Retrolux.
Leif: Retrolux really comes from my vision to make it much easier for folks out there that are replacing lighting, fixing HVAC systems, working in the buildings that people live, work, and play in to do their jobs more effectively and leverage digital tools to be more transparent with their customers, the stakeholders, and most importantly, with their companies so they can be more cost effective and more profitable.
That’s really what we focus on is helping those companies do a better job through digital tools, productivity tools, access to market, and design tools that help them understand how in the world are they actually going to install and design these new digital systems that quite frankly look very foreign to them when they’re used to working on dumb systems. So, there’s a lot of work to be done and that’s where we really strive to make our mark.
Blaine: The interesting thing in that description is he didn’t use the words “clean tech” or even “clean energy” that much. Are you not a clean tech company?
Leif: You know, we do things that the broader industry considers to be clean tech, but that’s not how we describe ourselves. When I started the company, clean tasks, everybody was going after it as a new industry. It’s something I’m personally very passionate about. I want to keep fossil fuels in the ground. But, the reason that we do it and the reason our customers ask us to do it is because it impacts their bottom line when they’re not using as much energy as they used to.
They’re not paying the power company as much when they’re generating their own energy. When they’re making their employees more productive, they’re seeing their bottom line improve. Those are the reasons that business owners make these decisions.
Along the way, they love the fact that they’re doing something great for the environment. They love the fact that they’re being a good steward of resources. But, those are all now secondary to making money, making businesses better, and most importantly for me, creating a better environment for humans to work, play, and live in.
That’s really what I think the market wants. It’s actually what makes businesses run and we’re doing a lot of good along the way which makes me really happy.
Blaine: What percent of the decision-making process for a CEO who’s thinking about embracing these solutions do you think is truly about bottom line versus PR and perception and maybe that’s shifting over time?
Leif: 95%. I have yet to see very many companies (and I’ve been doing this for the last decade of my life, I’ve been in the clean energy industry), less than 5% of the market will make a decision purely based on the clean energy benefits. Most all of them have to justify it with a direct financial benefit to their company or a direct benefit to their employees or stakeholders.
They love to report on all of that. It’s great marketing. Many of the CEOs and CIOs, the people making those decisions, have a personal vested interest in preserving our environment for their kids and their grandkids. Absolutely.
End of the day, they look at the bottom line and it has to make dollars and cents. That’s one of the things we at Retrolux are super focused on is making that crystal clear to those business owners that they are making a good financial decision for their company and the time is now to make that decision so they don’t delay an action that is good for the environment, but also, good for their bottom line.
Blaine: Really really interesting. How did you get to where you are today? What’s the journey that brought you to be a clean tech guru or clean energy guru and provide these solutions and found Retrolux?
Leif: Yeah that’s a great question. The reality is I didn’t always have this as a passion. I’m not sure exactly when I realized that sustainability, clean energy, was my personal passion.
But, I do know that it came somewhere during my junior year in college. I was in chemical engineering on a track to work in oil and gas or other big process facilities and realized it just wasn’t what I wanted to do in life. So, I switched gears and said, “How can I take this education and do something positive for the world that I believe in?” And realized that I was very uniquely talented in clean energy and energy conservation and renewable energy as a general field and decided to focus all my efforts on that.
The idea for Retrolux came about five years into my career. I was a practicing engineer and then I started an energy service company. We would go out and help commercial building owners, industrial facility managers, agricultural processors, understand how they were using their energy and how they could reduce their energy either through conservation, energy efficiency, putting in renewable energy systems to offset their energy consumption, and most importantly, would help them understand how to do that cost effectively with a return. If they didn’t have their own capital would help them even find financing.
That’s really where I started to get into this industry. Along the way, I started to be depressed because everybody was using pencil and paper and Excel spreadsheets. I’m not a Millennial, but I’m pretty darn close. I’m kind of the “Xenial” they call it; Generation X in between millennial and generation X. [I decided] software has to be a part of making this industry scale. By scaling, we’re going to get more and more technologies to be cost effective which is going to allow more and more companies to go through a digital transformation and become more cost effective.
Again, scaling begets more scaling, right? Things get more cost effective which creates more which created more cost effectiveness. I really decided that I had to develop a software company to take my industry which was very, very archaic, very technology poor and give them the tools to be more effective, more cost effective, and most importantly, the faster at presenting the value prop for their end users on why digital transformation might make sense for them that by default has benefits to the environment.
That really was the genesis for Retrolux, this idea of: I can only do so much with my own company. How do I take what I’m learning and the systems I’m building and scale them? Software is a great way to do that. Digital transformation is the name of the game and we’re seeing it succeed in spades right now.
Blaine: I’m glad you brought up digital transformation because that’s exactly where I was going next. Can you bring to light some examples where clean energy and the solutions that Retrolux is providing have enabled not just marginal improvements to the bottom line and maybe some good PR, but some kind of actual digital transformation in the organization?
Leif: Definitely. Our customers every day that we work with fit into a few different customer types, but many of them are like lighting contractors or energy service companies. These are guys who live out of their truck with a pad of paper and pencil and, for the most part, haven’t gone through any digital transformation. When I started Retrolux, we would go into offices that still had fax machines. They used them as their primary source of communication to the outside world other than a phone.
We literally were helping people not only learn how to use a cloud-based system, understanding IT technology, to having to train them on what it even means.
One of our customers, to give you an example, I said, “We’re going to help you do your job from the palm of your hand. You’re going to do everything you’ve been doing, but on an iPad. He pulls out a phone that has probably been dropped off a ladder 50 to 100 times. He opens it, flips it open, and he goes, “I barely know how to text.”
To get him to basically run his entire business off of a cloud-based system with auto alerts and a mobile iPad (you take information out in the field and work with) was a digital transformation for his business. Now, that same customer is able to inspire his customers which are the building owners that he’s trying to help move from an old lighting system to a new lighting system that as network controls, IoT capabilities, real-time location services, and help him understand how he can make a digital transformation of his business that impacts his bottom line, provides productivity benefits to his business.
We literally are taking people from a very 1990s approach to business all the way through to where the industry is leading today and we do that very regularly.
Blaine: It’s interesting because the cultural aspect and change management aspect of digital transformation continually comes up in our discussions here. You seem to have some secret sauce there because how could you possibly take a gentleman and a company that is using indestructible flip phones and bring them to this world of real-time, cloud-based applications and iPad’s. How do you even do that? How could you possibly motivate them to make that much change or what is it that’s causing that to happen?
Leif: There’s a few different tactics that I really recommend. First, you’ve really got to listen to your customers and understand where they are at. Sometimes, that means you’ve got to remember when you were there. I mentioned I’m a Xenail (in between Millennials and Generation X). I grew up without computers just barely. By the time I was graduating high school, we had computers.
But when I grew up, they didn’t exist. I remember when you were making phone calls with a cord connected to the wall. I still remember that world. I can still connect with them and help them understand that it is possible to embrace new technology.
First, you really got to get in your customers head and understand the problem from their point of view. If you remember that or you’ve got people on your team that have been there, even better.
Second, you really need to wait for them to be ready. You cannot force people into this. They have to be at a point where there’s a reason that they want to move. Sometimes, it’s pressure from the market. Sometimes, it’s just something they’ve been thinking about it for a long time and are finally ready to go because they got a little low in their business.
It could be that there’s a leadership change. We see a lot of times where dad’s handing the business over to his son and that leadership change creates an opportunity for them to try new things. There’s got to be some intrinsic reason for that company to want to move. Just like clean smoking, nobody can tell somebody to quit smoking, [00:11:29] you can’t get somebody to want to make changes in their business unless it’s something they believe is right for them. [5.3]We really like to be a resource for them educationally and ask questions off of so when they are ready to make that change, they feel comfortable knowing that we’re there to support them.
Those are the two big things that I find are the biggest drivers of success. Of course, once they decide to make that decision, you have to be ready to support them and I mean support them. There is no amount of support that you can assume they’re going to need. Some people are going to be more low touch, some people high touch. Some people want in person. Some people want videos.
You really have to be willing to meet them where they are at and provide them the support in a way that is most meaningful to them. That support, I’ve found, never ends. We are not in a business where many of our customers are trained, off and running, and we never hear from them again. Most of our customers are continually wanting more support. Our industry is moving fast enough which gives us a super awesome opportunity to continue to be an educational resource for them.
I think taking that on as an obligation to your customer is something that you have to personally believe in because it will shine through to them. Do the same with your customer because they’re going to have the same needs, the same fears that you may have at some point. So, get used being there for them and putting that extra level of effort in.
Blaine: Can you share with us another anecdote about how Retrolux has helped transform a company?
Leif: One of my favorite ways of transforming companies is really working with them from kind of a midstream forward or maybe they’ve tried another solution and it didn’t work out and then they come back to you.
One of the customers I have in mind is they’ve gone out and tried another software system, maybe a competitor of ours, and it didn’t work out for them. It was wrong time, wrong place. Maybe the software just wasn’t what they needed.
Then, you almost have to come in from a different perspective of helping to unlearn a little bit of what they learned and help them understand why that approach didn’t work so that they could feel comfortable that the next approach they are going after is going to work.
I will say that those are a very different approach, those customers/situations. I think there are a lot of fun as well because you get to learn from them on what didn’t work. That goes directly back in to feeding the rest of your system. I’m not making the same mistakes with your customers.
Always think about every opportunity, when you talk to a prospect, customer, partner as an opportunity to learn how you can do things better. Quite frankly, I feel like we’re all in this digital transformation together. I might be finding out cool things before Blaine does and Blaine is going to find something cool and he’s going to share with me. Then, together, we’re stronger. As we all go down this journey, it’s always good to remember that nobody has all the answers and that we can learn just as much from our competitors as our customers as our partners as we can from going out and googling it ourselves.
Blaine: We see that a lot as well at VANTIQ. Sometimes we come in as part of a greenfield project, but in many cases, it’s after a failed project; after a project that took too long, went way over budget, wasn’t anywhere close to achieving its objectives, and then how do you come in and learn from that but then fundamentally don’t do that again, do it differently, do it better.
Leif: I think those are almost more challenging because you have to figure out somewhere along the way whether you’re going to be able to salvage what was started or you have to start all the way from scratch. Both are really hard decisions for anybody to have to make, especially the customer because they have sunk costs. They’ve got time that they’ve now blown.
Many times, there is no right answer. That’s where it’s really challenging: choosing between two not right answers. It can be really challenging, for sure. We could get into how to manage that a little bit, but it’s a tougher one, for sure because it’s so unique to the customer in the situation that they’ve got themselves in.
Blaine: Do you tend to work with the business side or the operations side or do you ever end up working with the IT department or do your customers tend to have IT groups?
Leif: It depends on the size of our customers. Our larger customers will have IT and we may interface with them a little bit. For the most part, our customers do not have IT. They are small, medium, maybe a little bit large businesses. The people that we’re selling to are the ones to be using it.
We’re cloud-based so they don’t necessarily need to go to their IT folks to get permission to tie into their servers. Most of the time, we’re in the operations, the salespeople, the marketing folks that were selling to. That being said, our customers (and we do a lot of education and training for our customers) are selling to typically 3 decision makers.
They’re going to have the facility managers because they’re out there installing lighting, IoT systems in commercial buildings. You’ve got your facility manager: somebody who’s responsible for making sure the lights turn on. We call that operational technology. The technology is operating. It’s not doing anything else. It’s your typical dumb technology.
The second decision maker, if they’re going to put in a network control system, they’re going to put in an IoT system, is going to be the IT department because now you’re connecting into their systems. There’s going to be a massive difference in the amount of security that they require which is going to have a big impact on how easy that conversation is going to be. That’s the second decision maker.
And then, almost all enterprises or corporate sales, at some level, you’ve got the CFO or the equivalent. You’ve got the financial decision maker. You’ll notice that none of those three are the sustainability director. For those three people, it has to work, be secure, and it has to make money or be a cost that they have to incur otherwise.
Then, if all those things make sense, guess who gets called up? – the sustainability director to figure out how to make this thing look nice for the company. Those are the typical three major decision makers.
I think, for our customers, many of them are not used to talking to that IT department. They are used to talking to facility directors. That’s their normal customer. The facility director typically runs it up the flagpole to get the budget approved. They don’t necessarily interact with the CFO even though we give them awesome tools that empower that facility director to get a yes from the CFO, whether that’s no money down financing, cash flow positive day one, we give them that information with our software so it’s easier for those decisions to be made.
We also include how much carbon dioxide it is saving by using less energy which gets that sustainability director his check box. We make sure we produce reports and information that allow each of those decision makers to say yes.
The new one is that IT department. Before, the dumb light you put in, the IT department didn’t care because it wasn’t going to affect anything. Now, it’s talking to their servers. It might be sending data to them, pulling data down.
One of the best examples that I’ve heard recently about how IoT is causing massive breaches or breach opportunities for corporations was a fish tank in Vegas that was used to start pulling massive amounts of data out of a casino. They used the fish tank’s IoT sensor. Dark Trace, if you’re familiar with them, was the company that caught it. They were pulling just enough out every day that they were basically undetectable by the firewalls and over five days, it gathered a tremendous amount of sensitive information from that casino, out of a fish tank. When you talk IT directors, they’re all worried if that light now is going to have an opportunity to create a threat to their business.
Here’s another anecdote. You see a lot of companies out there setting up shadow IT systems. The Facility Director says, “This looks great. I want to put in my smart lighting system, my IoT system on the HAVC.” He goes to the IT Department. The IT Department says, “We’re not going to let you have this on the cloud. You’re not going to be able to use our infrastructure.”. The Facility Director goes back to the vendor and vendor says, “I’ve got a solution. I’m going to go put a little 5G router out there and we’ll just do this off their system.
Well, that’s all fine and dandy. The project gets approved. The IT department doesn’t even know it exists. The vendor comes in, sells the system, gets it installed. He’s stoked. He goes to hang out at his beach house with his big fat commission check. Then, the system fails and they can’t turn their lights on and off because the router broke, gets who gets called? The IT department. The IT department doesn’t even know the thing existed and now they’re frustrated with how the thing went down. It’s a very common thing happening in the industry right now.
Again, the IT department has a real role. They will be involved eventually. And so, you need to figure out a way to make sure that you can meet their needs in addition to these other stakeholders that you’re used to working with already. That’s tough because, as a sales person, and I used to come from the business. I’m an engineer, recovering engineer now. But I did sales and the less people you need to get yeses from, the more likely you’re going to get to a final approval.
One more person that you may not understand how they think. You may not understand their goals and their problems. It’s just one more risk that a lot of folks choose to try to get around. We’re trying to help people understand that you really can’t. You really need to engage them. Long term, you’re going to find that you have opportunities for upselling/reselling later on because you build a strong relationship and showed you’re competent.
Those are the type of educational nuggets that we really have to, as an industry, educate our clientele so they can be more successful. Most importantly, we can be allowing these end users to be more successful and hopefully get their digital transformation completed per their schedule as well.
Blaine: And not stalled out because they forgot or didn’t want to involve IT and they get so far down the road and then things come to a screeching halt either before the project gets launched, or in the example you just gave, after it’s launched and then there’s an issue and a problem. Then, you can bet there’s going to be 20 steps back before they start to move forward again.
Leif: Now you’ve broken one of the most important things in every customer/supplier relationship which is trust. Now you’ve broken trust which means you not only have to gain their trust for the first time, you’ve got to unwind the mistrust that you’ve put into the system. That’s the hardest situation to get in.
Almost all of us have accidentally at least stepped in that cow pie once or twice – not because we wanted to but just because we didn’t know who the right decision makers were that you get in front of. Sometimes it’s an accident but more people can be trained. Now you’re selling something that connects to the Internet. You’re going to have to talk to IT so get that going as early as possible so you’re not scrambling at the end.
Blaine: So changing gears from the organizational/cultural stuff, which is always often the hardest stuff. You’ve mentioned a couple times now the notion of real time. You’ve talked about auto alerts, real-time applications.
Is the notion of real time being able to take action in real time, to sense and analyze data coming in from these various devices and then take action as it’s flowing, is that becoming more and more important in your business and in the solutions you implement or you see implemented?
Leif: Yes so we are still in a very nascent stages in the building environment for this type of technology. Less than 5 percent of building lighting systems and HVAC systems are connected right now. We are still incredibly nascent. That said, the use cases are being proven as we speak. The case studies are being written.
The big organizations think CBRE, Colliers Cushman, Wakefield, the big property manager companies, the big asset owners, McDonalds, Walmart’s, they are absolutely looking at this stuff and are looking for the use cases that have a cost benefit right now. Some of the common ones that you are seeing in the built environment really come down to real-time locations services.
The common examples, obviously, are you’re in an airport and you’re trying to find your gate. Your phone could take you straight to it. So, Google Maps but for indoors. That’s a very popular one not only for public spaces, but also for office buildings, to know where the employees are at.
In one case, I think it was CBRE commissioned a study in Europe where they were able to watch how the employees interacted with each other, what desks were being utilized over the course of a couple of months. They did two things that was really interesting.
First was they found out the Joe on the first floor walked up to see Susie on the third floor three times every day. That means they work together. They said we need to put them together because they don’t go anywhere else. They go to each other. So, let’s move them to each other so they are not wasting time walking.
The second thing they found was that there was a lot of desks that didn’t get used. After that two to three months, they actually were able to reorganize the office space and freed up 40 percent more space. The current tenant was stoked because now they’re getting to reduce their office space by 40 percent. They were now able to lease out the other part of that office space, but because of this service, they got a price premium of 20 percent.
The company that downsized got a price drop of 20 to 30 percent after you do the math. A new entity needed less space so they saw a cost decrease and the building owner got an overall lease increase on the building which directly impacted his net operating income which justified the infrastructure spend. All of a sudden, one little technology had a massive improvement for that company’s ability to make money and the other two companies inside of the building to save money.
That’s really cool, but is that a clean tech technology? I would posit that it is because now all of a sudden, that company that got moved in didn’t need a whole new building to be built. All the embodied energy, the energy of all the equipment in it didn’t have to exist. Is that a clean energy company, clean tech business, or is it just good business that happens to have clean tech benefits?
Again, you’re seeing why the use cases are starting to really drive the benefits. Not that it’s clean tech, but then you start to look at it as it is a clean tech play at the end of it. That’s one really cool one that I see out there.
Another one that we’re seeing more of is real-time sensing. You put a sensor in a piece of equipment, (and I’m sure you’ve heard this in other industries) it watch as the vibration on a motor that runs an HVAC compressor. It starts to wiggle a little bit more than it should and that automatically sends an alert out to somebody who looks at it and says, “Yes, that is going out of control.” They shut the unit down, send a service tech, he fixes it. Now the equipment last for a little bit longer.
I’m an energy engineer. I can tell you that if it’s wiggling, it’s not as efficient. So now, you’re going get a little bit of energy savings, but most importantly, that equipment’s not going to fail as fast. What I mean by failure, I mean total failure which means the equipment is going to last longer.
Again, now they don’t need to buy a new piece of equipment for say two to three years. The equipment is running more efficiently, so they are getting cost savings on energy. They’re getting massive savings on their CAPX. When that piece of equipment doesn’t get built for two more years, all the embodied energy: costs of shipping, fuel it took to ship, the fuel it took to make, to mine it doesn’t have to exist.
Is that clean tech? I’d say yeah. It is. But it’s not directly clean tech. You’re looking to see how a lot of these tools and benefits that are coming to market eventually turn into a clean tech benefit, but that’s not why they’re getting executed, getting built. The real value is in cost savings and in value to the business. It just so happens to be also good for the planet which is where I really get excited about this new, what I call, clean tech 2.0. We’re solving really awesome problems for the world. And along the way, we’re also making it a better place. Best of Both Worlds.
Blaine: That’s a great way to look at it and it hadn’t occurred to me before, but fundamentally, any technology that can improve the efficiency and effectiveness of a business is a clean tech solution even though they might not even be thinking about it that way but it’s a great perspective. Really interesting.
Blaine: Well I do always circle around to asking my guests if they like to call BS on a particular element of conventional wisdom. It could be inside or outside of clean energy or technology in general. You decide. But is there an area where you’re you think X and most other people think Y?
Leif: [Laughter] All right. You asked me to prepare for this one, and I just remembered what mine is. I’m glad I had a chance to think about it. I think The Beatles are one of the worst bands of all time. I think they are horrible.
They are the equivalent of the boy bands of today. They are Mmm Bop of the 60s so there you go.
I think VANTIQ TV has come to an end. That’s it. This series is over. I can see now it’s going to be a Twitter storm. Look what you did.
Leif: They put out some good music, but overall, one of the most overrated bands ever.
Blaine: Well that that is creative. Nobody’s ever come up with one like that before so good for you Leif.
All right, so any key takeaways or tips for a business leader that’s trying to drive this kind of real-time transformation whether or not they actually call it a clean energy driven transformation in her business?
Leif: Definitely. I think the biggest takeaway I would give is really try to meet your customer where they are at and start there. I think most of us that are in the industry tend to live on the edge and we try to get people there fast. Instead, you need to go back, really figure out where they are at in their journey. It takes a lot of listening and a lot of questioning. Then, create a plan that makes sense for them to get from wherever they are to where they want to go.
You’re the sherpa. You’re not the one that’s at the finish line cheering them on to come to where you’re at. I think that is the best way to get folks to engage, committed, and when they’re engaged and committed, the best chance of success will happen. If you really need to, you can put your Beatles on in the background, listen to it, and it will still work out as long as the customer likes The Beatles.
Blaine: Okay, enough with The Beatles. That was a good one. [Laughter]
Well that wraps it, Leif. Thanks so much for joining us today. Really insightful conversation from somebody who’s obviously living this stuff in the real world. So, thank you so much.
Leif: Thanks, Blaine!
Blaine: You’re welcome. Those interested in hearing more of Leif’s thoughts can follow Retrolux App on Twitter and of course check out his company’s Web site at retrolux.com. And you can reach out to me anytime at [email protected]