Home energy consumption is amongst the most critical industries in the world. It provides us with access to the fundamental necessities in life from heating to refrigeration, but at the same time contributes to 20% of the West’s Green House Gas Emissions (GHGs). It also makes up between 11%-13.6% of household spending, while penalising more heavily those that can least afford it.
And it’s a market going through an immense change. According to Goldman Sachs’ recent Carbonomics report, 2021 will be the first year where capital investment in renewable energy will surpass investment in Oil & Gas, with many countries, including the UK and Nordic countries, seeing renewable energy now making up over 50% of all supply.
Just as things are changing radically on the supply side, home energy consumption is changing at pace too. Simple, non-digital devices, from light bulbs to boilers, are being replaced by smart devices, always connected, highly configurable and data-rich. Uptake of these devices is being driven by increasing interest and concern about the energy we consume, both due to the impact on the planet and on home budgets. And in amongst all of this, we’re on the cusp of one of the biggest shifts in-home energy consumption in a generation, as electric vehicles shift the power required for our main form of transportation from petrol stations on to our home electricity meters while placing a huge, mobile battery on our driveway.
In the face of such upheaval, how can anyone, let alone a start-up, navigate the market and create enough value for its users to become a highly successful company? Well here are the four concepts that we think have combined to make Tibber one of the most interesting companies we have seen in the energy industry, and how we got to conviction on this funding round.
1. ‘Know thy energy’
Innovation can come from anywhere, but certain experiences and cultures do give you a headstart. Tibber was founded by software engineers who have decades of experience in the utilities industry, and a Chairwoman who still works at the top of the sector. After years of seeing how the status-quo operated, Edgeir and Daniel, the founders, had the knowledge and conviction that now was the time for change. On top of that, they began their careers in Norway and Sweden, countries that are already global leaders in both household consumption of renewable energy and adoption of electric vehicles.
Having a headstart in understanding their market and being in countries that are already role models in solving some of the challenges has given the Tibber team a depth of insight, talent and sense of mission that permeates the business.
2. ‘Nature is pleased with simplicity. And nature is no dummy.’
Over our two decades investing in consumer software businesses, from Revolut to Citymapper, a common trait in the most successful ones is an ability to make the complex, simple. Abstracting away lengthy processes and unclear logic with beautiful design is what Tibber does best, allowing bill-payers to switch their home energy supply to renewable sources in under 2 minutes, from a mobile app.
But Tibber hasn’t just brought simplicity to the front-end of the user experience, it has simplified the business model of home energy as well. Unlike traditional energy providers, Tibber doesn’t look to make a margin between the price of renewable energy and the price they charge consumers. They cut out the murky middleman entirely. Instead, Tibber gives its users the spot price for energy at any one time, only charging a flat fee for access to Tibber’s other services.
Using Tibber, it feels very easy to switch to renewable energy and to understand energy prices. But that’s the result of a huge amount of engineering and hard work to make the complex, simple.
3. ‘What gets measured gets managed’
You know how many steps you’ve taken. You know how many minutes you spent on your iPhone today. You know the calories in your yoghurt and the followers on your social media accounts.
But do you have any idea how much energy you use? Or if you do, what that number really means?
Because Tibber has a different business model to almost all other providers, they don’t want to hide what you are using, they want you to know about it and hopefully change it. Front and centre, every time you open the Tibber app, you see the amount of energy being used in your home.
Giving someone this number on its own is empowering, but Tibber also gives its users the ability to compare their energy consumption against their neighbours, against last week’s bill, against their other properties and against their own energy consumption targets. This gives context to your energy consumption like never before.
And once people are given this number, and understand it, then they are ready to change it. Just as MyFitnessPal gave people context on the calories they consumed for the first time, Tibber gives its users a deep understanding of what is going on in their home, but unlike MyFitnessPal, it can help put them on a diet as well.
By closely monitoring energy prices, Tibber provides alerts to users when prices are dropping or spiking, for instance at times of high winds or low light, to allow people to adapt their home energy usage.
And through its deep integrations into other appliances, from smart lightbulbs to your electric vehicle, Tibber can help balance the timing of energy consumption as well, lowering both your energy bill and your impact on the planet.
4. ‘A magic number’
All of the above may seem like magic, but it is really the result of years of hard work, mistakes, iterations and adaptation. What is magic, however, is Tibber’s referral rate. In our many years of investing we have never seen a paid-for consumer app with a referral rate as high. To borrow from Sarah Tavel’s excellent ‘Hierarchy of Marketplaces’, the single most important metric any business can track is their user’s happiness. And what better way to quantify that happiness than seeing users recommend the service to their friends, family and even strangers on the street. This outstanding acquisition model has helped Tibber to grow to over 100,000 homes, saving its users money and a lot of carbon in the process.
Supporting the global transition to renewable energy, the shift to lower home energy consumption, and the rise of the connected home is a huge endeavour, and is unlikely to be an easy or straightforward journey.
We are excited to join Edgeir, Daniel, Monika and the whole Tibber team as partners on that mission.