00:32:08 · Sachin, Zach Dell
[00:32:08] S1: Zach said something in the interview that stuck with me is that their product is an IQ test. If you don't sign up, you fail that test because essentially base is just cheaper power. Who the hell doesn't want cheaper power? It's a no brainer. I think every founder should be able to apply that IQ test to their own product. And Green Oaks Capital has another great heuristic, which is that of having a jaw dropping customer experience. If you don't have a JDCE, then get back to work. And I can confidently say that one of our major sponsors, Vanta, has this experience. They help you protect your customers' data and onboard them. That's just an IQ test. All customers need security and Vanta gives you that security in an easy way. Vanta automates SOC two, ISO 27,001, all the other major frameworks and connects to your existing tools and gets you audit ready in weeks instead of months. So when you're closing major enterprise deals or raising capital, Vanta is the thing that stops compliance from being the major bottleneck when you can least afford that. Check the link in the descriptions and you'll find a special offer from Vanta. When I hear about the distributed battery play, as well as the business model, talking to you, some of your employees doing the research, it all made a lot of sense. And I was just sort of left there thinking, why haven't energy providers already been doing this? Why haven't they been supplying batteries like this? Why haven't they? [00:33:26] S0: Have you been to their offices? Have [00:33:28] S1: you gone They
00:33:30 · Zach Dell
[00:33:30] S0: don't feel like this. If you go to the offices of the major energy companies, and I have a lot of respect for them. They've done a lot of really hard things and and solve our problems and been around for a long time and they're in a tough business. They feel like the offices of JPMorgan and Goldman Sachs. Right? They are not technology companies. They don't have factories. Right? They don't have the engineering talent that we have. They're not r and d driven. They're not engineering led. They're largely finance led. Right? And this is... I'm a recovering finance guy, you know, so I've... Yeah. Know nothing against that. Right? Like, think there's a lot of value there. But that's why, you know, my co founder is like a hardcore engineer, and the entire rest of our leadership team are hardcore engineers, and I would call myself engineering curious. So as a finance guy, so, look, I I think that these companies are capable and, clearly, I mean, are not like crappy businesses. Right? Like NRG Vistra Constellation, they trade at, you know, 30, 40 times earnings. So like these are nice, really nice businesses. You know, Vistra is a monster business, right? Like, and there's companies all over, you know, GE Vernova is more of an OEM, like that's a monster business, right? I mean, has an energy business that's crushing it and and super attractive business. So all kinds of great businesses in the category, but there is no energy technology platform company that is actually building an infrastructure like services platform with an engineering led approach. And I think we're really unique in that way.
00:34:56 · Adam Miller
[00:34:56] S2: So you told the story about how you met Justin, you started exploring energy markets. But when was that moment when you realized that the grid could be decentralized and this could be a really important business?
00:35:07 · Zach Dell
[00:35:07] S0: Yeah. I take you back to to my time at Blackstone and really like sitting in a more institutional investing seat where you're looking at asset classes. Right? And the battery asset classes existed for, you know, a decade. And this has largely been dominated by utility scale batteries. So think shipping containers in a farm field somewhere, plugged into the power grid. Right? Megapacks. Right? Think about that. And that's been a really good asset class over the last ten, twenty years, but it's fundamentally constrained by two things. One is interconnection capacity. So there are... There's this concept of the interconnection queue and the interconnection queue is very different in nature in Texas than it is in California than it is in, you know, Illinois and New York, and we can talk about those discrepancies, but it basically is a line that you have to wait in to plug in your utility scale battery. The second constraint is transmission congestion. So the place that you need these batteries is not the place where you can go put these big shipping containers. Right? Downtown Austin, Downtown Houston, Downtown Dallas, these densely populated city centers, that's where the load pockets are, but that's not where you can put the supply. That's where the demand is, it's not where you can put the supply. So you have transmission problems, right? And you have congestion on the lines and you have price spikes as a result And so the decentralized thesis came from a solution to these constraints. Right? How do you get around the interconnection queue and the transmission congestion? You deploy the batteries where the interconnection already exists, co located with the load, and that requires this decentralized architecture.
00:36:35 · Sachin, Zach Dell, Adam Miller
[00:36:35] S1: So is Base actually cheaper than other energy providers and how will this affect the life of an everyday consumer? [00:36:42] S0: Yeah. It's really straightforward. So you come to base, you sign up, we install a battery on your home. When the grid's up and running, we use that battery to serve the grid. We share the income we generate off that battery with you in the form of lower prices. When the grid goes down, you get that battery on your home to keep your home up and running. So you get all the benefits of home backup without the high upfront cost of a home battery or a home generator, and you save on your monthly electricity bill, which is driven by the battery on your home. So it's one integrated system that keeps your lights on and your bills low. [00:37:15] S2: Let's talk again about the customer because I think in Texas, it feels like a very logical place to start. There's been a history of people losing power. But as you move into other markets, what is the incentive for the consumer to, you know, sign up for for ten years on the battery, that don't actually own the battery, and to, you know, all the other provisions that come with Yeah. Signing up with Base Power? [00:37:35] S0: Think... And not to be a broken record, I think it's really simple. It just comes back to affordability and reliability. Yeah. It's like if we cannot lower your power bill and make your your electricity more reliable, why would you sign up? You shouldn't. [00:37:45] S2: How do you guarantee that affordability? Well,
00:37:49 · Zach Dell
[00:37:49] S0: it's inherent in the business model. Yeah. Right? So let's say, you know, this is your home. Right? And I'm just gonna, like, make this stupid simple for sake of argument. Like, this is a money machine that we put on your home. Right? And the money machine generates money. And we can take some of the money out of the money machine and we can like give it to you. Right? That's how we do it. Right? So the the battery is is is a money machine. It's it's a it's an infrastructure asset. It is a It is a technology. It's an efficiency box, right? And that efficiency box is creating efficiency by time shifting electricity, charging when price of power is low, discharging when price of power is high. Said differently in other words, charging when demand is low, discharging when demand is high, right? Load balancing the power grid. And because you are sharing your space with us, you're giving access to your meter. We are going to cut you in on the deal. We're going to help you save money by sharing this money machine, sharing this money box with you in the form of lower prices. Right? And that is that is the business model and the lower cost we can get this money machine in the ground all the way to the factory and how we manufacture it, to how we install it, to how we acquire you the customer, to how we support you in your customer journey. The more profitable the money machine is, the more money we can share with you, the more effective we can make the customer, the the the customer offering. Right? So we are eyes wide open about the fact that we're in a commodity business. I think that people try to, obfuscate that sometimes. Right? It's like electricity is a commodity. Again, no sexy electrons. I say this all the time. Right? Like we're in a cost structure game. It's like, why are we building factory one? Why are we building factory two? Like, because we have to drive costs down. We have to have a cost advantage. Why'd you raise a billion dollars? Because we have to get big fast. We have to drive our costs down. Like we are going to compete on cost. Right? And if we can't be the most affordable and reliable electricity provider in the world, like we are going to lose, but we're not going to lose because we are going to be that provider and we're going to do it through vertical integration and technology because that's the only way to do it.