The High Flyers Podcast with Vidit Agarwal
01:01:17 · Justin Lopas
[01:01:17] S1: Yeah, found this fascinating and I surprised myself. I couldn't tell you how a bill becomes law. It's funny when we first, when we hired our first regulatory person, she's excellent still with us a few years later. She was in the Texas legislature for a little while. And I was like, hey, okay, can you just tell me how a bill becomes launched? She's like, let's go watch Schoolhouse Rock. And and so anyways, it's... Yeah. To answer your question, I actually think that there's lot of parallels between legal policy, regulatory work, and engineering. And it's the nice thing about all of those, well, at least the legal side of it, the regulatory side is it's... If you're just trying to figure out if you... If the law works for you or what to change in the law, it's like... That's... It's all just very logical. It's like, what does the word say? Does it allow for us to do this or does it not? Where it becomes totally non engineering oriented and completely different, and I've surprised myself about finding this to be fascinating and interesting, is like how to get a law changed. And so I've learned a ton. We have an excellent team internally led by Zena, who is our chief legal officer and has legal regulatory policy in her purview. I've just been sort of on the sidelines cheering her and her team on now and and hopefully helped in a little in a little ways, but I've found it to be really interesting. To answer your question on the state thing, so there's a few things to know here. Electricity is mostly regulated at the state level, not the federal level. There are some federal regulations that FERC has, but for the most part, especially in our business, most things we care about are at the state level. And states are interesting. So there's two broad categories, deregulated and regulated, as you said. Deregulated means you can interface directly with the wholesale markets and you can sell power into individual homeowners. So if you live in Houston or Dallas or Chicago as an example, you can choose who you buy your power from. We're one of those options. We use that to also bid into the wholesale markets and monetize our batteries. That's go to market motion A, so that's B to C directly. In the regulated markets, and so actually Texas, so Austin and San Antonio and other parts like outside of DFW are regulated, those are a B2B2C model.
01:03:16 · Justin Lopas
And so actually our first customer is the utility. We go get a deal with the utility like we have with Austin Energy here in the city of Austin, who is actually owned by the city government or is a part of the city government, should say. And that's a deal whereby we put batteries on homes. We basically have developed a power plant for that utility, in this case, Dawson Energy. They pay us for access to the power plant that we built on spec for them, but then we also have to engage with the end customer and put the battery on their home. And so that works in California and basically everywhere outside of Texas and some states in the Northeast are regulated states where you do some version of what I just described. And so we have both about... Honestly, about 505050% of our business is regulated, 50% is deregulated today. It'll probably shift more towards regulated, honestly, just because there's more regulated utilities than deregulated utilities, but the deregulated markets are a great place to start because you don't have to go get a deal with the utility. You don't have as much of the cold start problem. When we first started, I was like, okay, well, if we just go knocking on PG and E's door? This is the Northern California utility and it's two guys with a PowerPoint. Trust us, we've got batteries. And like that obviously was not going to work and so we went and became a retail electric provider and sold on an individual home basis as a starting point and we continue to do that today.
01:04:32 · Vidit Agarwal, Justin Lopas
[01:04:32] S0: So interesting. I mean, was one of the fascinating things I discovered in my research because a lot of, I mean, you probably have experienced this because you've worked at SpaceX and Andrule, but most VCs and most software companies wouldn't be thinking about regulation, right? Totally. Not in the traditional I [01:04:46] S1: know you you talked to Sal from TrustMetrics who's a close friend and also a close partner to the company, and they're... They have an interesting kind of mandate where they're a bunch of lawyers. Sal's a lawyer by by by training and background, and he hires and has brought on a a team of lawyers, and they think about their investments from the sort of angle of... I don't wanna speak for him, but I think that they think about the sort of like regulatory unlocks or legal challenges associated with the business model, and they've been super helpful to us, as have many of our investors, on this particular topic. Sal and the team have been really helpful. [01:05:15] S0: Yeah. He was telling me about his living room. I think there's a great LinkedIn post he made about the living room where y'all started, and he was telling me back to your tinkering comments. I think you were playing with his dryer and his washing machine to test early use of batteries.
01:05:15 · Vidit Agarwal, Justin Lopas
[01:05:15] S0: Yeah. He was telling me about his living room. I think there's a great LinkedIn post he made about the living room where y'all started, and he was telling me back to your tinkering comments. I think you were playing with his dryer and his washing machine to test early use of batteries. [01:05:30] S1: So there was only... Yes. The only place... So our first our first office was a house, and it was his house that he rented to us that he used to live in. And the only place that 240 volt AC was in the in the washing... In the laundry room because the dryer has a 240 volt AC. And so we unplugged the dryer and plugged in some test equipment, and it was pretty messy, but it ended up being quite useful. [01:05:51] S0: Yeah. I thought that was hilarious. Before I move to RapidFi Sprint, tell me about like what's coming up for BASE? Like we're recording this in October 2026. Are you thinking about international? Are you thinking about I mean even your products? I think you've gone from like generation one to generation three or something. You've skipped products and you've killed it in a good way. What's coming up? Like what's on the horizon in '27?
01:06:16 · Justin Lopas
[01:06:16] S1: Yeah, so expansion to more geographies with more utilities and more homes in our existing markets throughout Texas, Illinois. We recently just right before this announced Georgia, we've got two or three other states now that we're in sort of final discussions with. And the way in which we monetize those and the regulatory structures with which we go deploy these batteries will be different and interesting and have some interesting things. Working on a new product right now that is, I'd say, quite relevant for energy, but it's not specifically exactly energy itself that I'll leave off of the detail list here, but that's a big focus of ours now. And we've grown quite quickly. We'll do about a gigawatt hour this year. We'll hopefully multiple x that over the next few years. But we're really focused on is like getting really efficient on how we install and deploy and source components for and manufacture the batteries, whole sort of like supply side and demand side customer pipeline. We're like, we're doing a big effort right now basically to just add efficiency throughout the supply and demand pipelines and really focus on building out our internal tools and automate a lot of the manual processes that we have today. And so the next few quarters are going to be really nose to the grindstone on just how do we get really efficient and improve our customer experience along the way. And so that's the kind of near to medium term. Long term, we want to go up and down the stack. We want to be thinking about generation and moving power through space. We want to be doing more potentially within the home and more in the energy stack and build out what you would sort of consider maybe a modern version of a power company, modern version of a utility. Also on the regulatory side, pursuing a bunch of really interesting things that basically unlock some areas of the business for us, remove red tape where it's unnecessary, run permitting, that sort of thing. We've done that in Texas, we're pursuing that in a few other states now. So, yeah, that's just on the road map. Continue to grow the company and grow the grow the product suite, but be very thoughtful about not trying to go into too many markets and too many new products. Like, we need to be very good at deploying and managing and installing tens of thousands of batteries.
01:08:15 · Vidit Agarwal, Justin Lopas
[01:08:15] S0: Yeah. I was gonna say, is there, like, a international market that's a clear white space opportunity? [01:08:20] S1: Actually, funny enough, we looked at Australia pretty pretty deeply about a year ago, and there's a few international markets, Australia being the top, that are the most sort of ripe for a product like this. It's a deregulated market. There's a lot of competition in the retail space, and there's really interesting ways to monetize the grid and sort of... I think Australia is the most advanced in the world in thinking about how... Thinking about sort of the quote unquote smart grid as it's referred to oftentimes in the media, but sort of the grid being a two way street instead of a one way street is, the way I'd simply describe it. So Australia is interesting. The UK is interesting, deregulated big power market. Funny enough, actually, Australia is basically like the same size as Texas in terms of its electricity demand at peak Mhmm. For the whole country. And so that's a interesting sort of corollary there. There's a few other international markets, Brazil and South America. Japan is particularly interesting. So is Germany. We're going to be in The U. S. For a while. I mean, we'll be in U. Forever, but we'll be focused only in The U. S. Certainly for the next year or two or three, just because geographic density and sort of deeper penetration into our existing markets is a key focus of ours.