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Power2Switch ignites an electric revolution

Power2Switch ignites an electric revolution

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Chicago entrepreneur Phil Nevels and his growing startup Power2Switch have taken on an admirable task: making people care about their electricity. Of course people care about electricity when they don’t have it (spend a week on a canoe trip without an iPhone charger and tell me you wouldn’t kill for just five wonderful and natureless minutes on YouTube), but when it’s flowing endlessly from your walls each and every day it can be all to easy to forget how vital it is to our everyday lives.

Power2Switch is not only educating and creating a newfound transparency around that indecipherable piece of mail you get from the power company each month, but is also allowing customers in deregulated states easily see and compare the options they have for electricity. Illinois is currently one of those 15 deregulated states, and that means you can choose from where and what type of energy you want powering your Pokémon waffle maker.

We chatted with Power2Switch COO Phil Nevels, who on top of being a crusader for deregulation happened to be cousin to late Diff’rent Strokes actor Gary Coleman. Seriously, we’re not even joking.

What was the inspiration behind Power2Switch?

Our cofounder Seyi Fabode actually had the idea for Power2Switch. He’s from the UK, which is deregulated in a similar fashion to how we’re deregulated here in Illinois. He came here for business school in 2008 and tried to switch his electricity provider and found that it was a very difficult process.

There wasn’t a resource online where you could compare different options for commercial or residential. We combined forces while at businesses school at the University of Chicago in 2009. When we launched we were focused only on small commercial businesses, but eventually opened it up to residential customers.

 

 

Why do you think so few people know that they have actual options when it comes to the electricity they’re paying for?

There are a few reasons. One is that electricity is a commodity and something that we often take for granted; people don’t think about it on a daily basis. There’s a recent stat that came out saying that people on average think about electricity on average six minutes a year. That corresponds really around the time they’re getting their bill on a monthly basis.

People don’t understand what consumption means. Even when you look at your electricity bill there’s so much you need to understand to even interpret what you see on the bill. What’s peak usage? What’s a kilowatt vs a kilowatt hour? There’s a lot of education that needs to happen there.

Do you think deregulation will continue to spread throughout the US?

If you look at the market now you have roughly 15 states that are deregulated. The biggest of those markets is Texas and in the midwest you have Illinois and Ohio. The majority of the states are on the East Coast, including New York, Pennsylvania, and New Jersey.

Most of those states deregulated in the late 90s -- from ’96 to 2000 you had all of those 15 states deregulating at about the same time. We’ve had all these years since where there hasn’t been any further deregulation, but we think we’re poised for another wave. Within the next three to four years we have an expectation that another nine or so states will become deregulated, with California being one of the biggest.

How did your charitable Kilowatts of Kindness campaign turn out over the holidays?

The whole idea was that customers could come and switch their electricity on Power2Switch and then donate a certain amount to pay electric bills for families in need.  The challenge that we found is kind of ironic: we got lots of folks who were willing to contribute, but it was really difficult to get people to raise their hands and say they needed help.

We promoted it very heavily in low income neighborhoods, but the problem is that oftentimes many people in these areas don’t have internet access at their home or nearby, and because we wanted to vet people the application process required them to make a profile and tell their story. We were spending a lot of money marketing but we ultimately discontinued it. I think it speaks to one of the challenges we face as a company, to generate word of mouth amongst people that switch on our website.

 

 

What has been your biggest failure?

I’ll say much of what we do I don’t consider it a failure. I think they’ve all been tremendous learning opportunities. Last year when we were coming off our fundraise we spent a lot of time and a lot of money on advertising. We did radio ads and banner ads online.

Those ended up failing miserably, but now we know. We know that banners aren’t going to be an effective customer acquisition process. We’re not going to know until we’ve done it for ourselves, because every business is unique.

What do you do in our out of the office for fun?

We have a team of about eight folks here and we’re a very laid back family. A priority established within the company is family first and business second. We really value relationships here. We try to commit two friday afternoons a month for doing something for fun as a team collaboratively, whether that’s going for drinks or bowling or a team yoga session. One of the most gratifying aspects of my time as an entrepreneur is working with this team.

What advice would you give to any beginning entrepreneurs out there?

A lot of startups that I encounter are solutions looking for problems. That’s the backwards way to do it. I definitely recommend experimentation, putting things out fast, growing a viable business and providing a solution to a real problem. Making a viable business is really going to depend on people paying you, so you have to truly be solving a problem that they have.

What’s next for Power2Switch?

We are continuing to expand to other markets -- that’s our big priority right now. We’re in Illinois, Texas, and New Jersey and the next states on deck are Ohio, New York, and Pennsylvania. We’re also trying to make the site more effective both for suppliers and consumers.

For suppliers we’re adding things like competitive intelligence, helping them to understand how their offerings in any particular market compete against their competitors. From the consumer standpoint we hope to expand into additional offerings with electricity like gas, but also provide more engaging tools that help consumers make decisions around energy efficiency.

 

 

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