Chuck Yates Needs A Job

0:20 Hey everybody, welcome to Chuck Yates needs a job, the podcast in my continuing series to figure out why we almost had blackouts this summer. Sean Kelly was cool enough to come on and let me see if

0:33 I can pronounce this right. Amperon. You got it. There we go. I mean, we made it up out of nowhere. So my co-founder, coined it, we're like, yeah, this works. And so we'll be like, ampere,

0:44 but when you're playing with energy, amp is a good, good route to start with. Oh, I like that. Yeah. I still struggle with Aegis. It's spelled A-E-G-I-S, the guys that help with trading and

0:56 hedging and so. I know who they are and I would have for sure pronounced that incorrectly. Yeah, not exactly. So anyway, it's hard making them names, but every other name is like taken, it

1:05 seems. So well, that's the running joke that every energy company today is a pharmaceutical name because it's like, okay, let's get seven random letters together and we'll cut, you know, We'll

1:17 cut two letters out of there. No vowels, you know, right - Fies are drilling, no - So real quick, tell me who you are and tell me about the company. What do you guys do - Yeah, absolutely. So

1:28 yeah, Sean Kelly, I'm the co-founder and CEO of Amperon. And we started the company in New York back in, I guess, end of 2017, early 2018. And we're venture capital backed and we've moved

1:42 headquarters back to Houston 'cause that's where all good energy companies should be based And what we do is demand forecasting. So what on the electricity side. So what that is is we go in and we

1:54 say, how many meters do you have? And you say, I am a big energy company and I have 50, 000 meters. I say, great, I'll take everything. And so we take those meters and then we give you a

2:05 forecast on the short term basis that over 15 days updates every single hour and tells you, this is what I need to buy next hour and the next hour and the next hour. So you can imagine back to

2:15 February of '21, as 35 blackouts. We do not calculate outages into our platform. But that's what people look at is that 15 day forecast. And then we have a five year forecast. And the reason of

2:31 five year forecast is important is because of the energy transition. So if you have rooftop solar, you no longer your house no longer looks the same. And so we would forecast that every week and be

2:42 like, Oh, Chuck's house doesn't look the same anymore. He obviously put solar on his roof. Great. Now here's what your energy company should buy for the next five years. So that's what we do.

2:54 And then we started in Texas, went right next door to wait, Australia after that. So we met them on LinkedIn. They were like, our grid is totally screwed. And we would love for you want a big

3:06 load forecasting competition. You want to come hang out with AMO, which is the Australian energy market operator. It's think or caught for Australia. And then after that, we launched in PJM New

3:18 York, New England, and MISO. So covered the East Coast. And then we launched Alberta, Canada, California, and then we'll close out the year with Southwest Power Pool and then early next year,

3:32 we are headed to Europe. So electricity, a megawatts a megawatt, doesn't matter where you are. And we want to forecast it. So that's our thesis and what we do And it's been a really, really fun

3:44 journey coming up on five years now. No, that's cool. So basically what you're telling me to make sure I understand is let's use our COT as the example, because I know a little bit about our COT.

3:58 I mean, our COT basically has power generators. Then you've got power companies that in effect sell retail. So the consumers of some sort, you're the software that's telling the power suppliers,

4:11 how much they need to go by because this is how much. Exactly, there's two parts of everything, right? Supply, demand. And so we focus on the demand side. So our big client base is retailers

4:23 and we also have some municipalities and cooperatives in Texas. So we cover,

4:29 there's 11 million meters in all of Texas and almost two million of them are on our platform. So we're telling everyone, here's what you need to do, about two million homes. So yeah, it's been a

4:41 pretty cool sales journey, better than I would have expected if you had asked me four years ago. So I had Campbell Faulkner on the podcast, call it, I don't know, six weeks ago or something. And

4:53 we talked about how the grid got to where it is. We went through kind of deregulation, we're paid for power only, we kind of sleep walked into looking up in 30, 35 of our grids, renewables and

5:08 okay, that's part of the problem here but that's really kind of the generation side on it. Is there anything we can do on, and we talked about prescriptions, how do we make it better? We need

5:19 more base load. Maybe we change the system where you can be renewable, but you got to pay a penalty for not being dispatchable, whatever the concern is. Yeah, yeah. I would think given your

5:31 insight on consumers and stuff, is there anything we can do on the demand side of it to not have blackouts? Yeah, absolutely. I mean, let me throw one more thing at you I'm cutting you off.

5:44 Because back in the day, I started my career as an oil and gas banker. And in 1998, I think it all went to 12 a barrel or 8 a barrel. So I had to figure out something else to do. So I googled

5:57 internet and hydrocarbons and ran around and was a power technology guy, because that's some way sexier than oil and gas. But we kind of had this thesis about the grid and just if we're going to

6:08 move from a world where the grid powers a mechanical device like your refrigerator. and you have a glitch who cares, it cycles on, cycles off, nothing bad happens to a world with microchips. You

6:21 had to have reliability. So I actually spent some time on the grid looking at demand and all, and my punchline to use, I don't think anything's changed since then. It really didn't - Yeah, I'm

6:32 pretty sure the power lines outside your house are the same power lines outside your house. So

6:38 I would agree and disagree with that, but I love the fact that you said you looked at oil and when it was like 12 or whatever, but I was like, I gotta find something to do. So I did the same thing.

6:48 It was March 31st of 2016, and I was trading at a small like prop shop in Chicago. So I spent my first 11 years as an electricity trader. And so no one knew what an electricity trader was. So

7:01 people were like, Hey, so what do you think of Facebook stocks gonna do? I'm like, I have no idea. I don't honestly care. But I walked myself out of there when it hit 161. This is a terrible

7:15 way to make a living. And I had another company that I've since sold that was going to like these big commercial buildings and helping them understand like, hey, this is how like you can reduce

7:26 your, your, reduce your demand, but also how you can lock in your demand. 'Cause it's a dollar 61 natural gas. It's not gonna be here forever as we sit in the 9 environment now. So when it

7:37 helped people like lock in those like five year contracts. So yeah, pretty interesting that you were like, this is that not how I want to make money. And I did the exact same thing in 2016 and

7:47 then started at that company.

7:50 But with that, back to the pros and cons of like what's changed on the grid. I think a lot's like from an infrastructure side, not a lot has changed, which is why behind the meter so much has

8:03 changed. And so infrastructure, power lines, they're there. They're not getting upgraded. Like you're in it to win it It's the greatest 100 years old. It was very, very forward thinking at the

8:15 time, but those days are gone. As we know in Texas, getting like, where is the wind? I didn't see any windmills driving here from midtown to your office. There were no windmills for some reason.

8:29 Maybe it went the wrong way, but it's all in south Texas and it's all down on the coast, right? And so there's not power lines to get it to Houston where we are, where everyone lives. There's not

8:39 power lines to get, and there's more so to get to Dallas just because West Texas is all over there, but it's just the infrastructure is not there. So that's where you've got to kind of come back to

8:49 like the behind the meter. And that's a making your house more efficient. My home, like my home was built in 2020 and it's the 10 square feet smaller than the home I grew up in in Sugar Land. And

9:02 so my electricity bills half of my parents is because we've got 1989 versus 2020. And so things are just so much more efficient like what are some of those things? I mean, they do everything from

9:14 like the windows, the installation, and then you can like the appliances, but then you can also go deeper and be like, hey, guess what? The new inflation reduction act just passed. And so you

9:25 can put solar in your roof and they're gonna pay like 9, 000 to do it. And then, but then you take the counter of that, like, and you're gonna plug a Tesla in your garage or a Ford Lightning,

9:35 which everyone's obviously very excited about in Texas, and you can get a 7, 500 credit for that So all of that type of the, what's happening at your individual meter is changing a ton. And that's

9:48 why Amperon's important because we are paying attention to every single meter and running a new forecast for a little over 3 million meters now across the United States every hour. So that's what

9:59 we're paying attention to. And then you're gonna see the next step of like telling electric vehicles how to charge. Like once this EV penetration, everyone wants so bad, like they built a truck.

10:10 you can actually get Texans on board with something as opposed to, I don't see all of Texas trading their F-250s for Priuses - The soccer mom's car - Yeah, exactly. So Colin McClellan's take on

10:22 electric vehicles is, he's really bullish on them because they're just great cars. I mean, I drove it in the Tesla - They're fast - Oh yeah, it's like souped up. There's, you know, no wheels

10:32 are spinning - Oh yeah - And so anyway, he is bullish on them because of performance, but his knock on them is, why do they all have to look like soccer mom cars - I completely agree - Like can't

10:42 we have something that looks cool - Yeah, I agree. And I think you're heading that way, like getting forward into the game is definitely helpful. People who actually know how to make cars, right?

10:51 You've got EV companies and they're trying to make, like again, at times I agree, they can look soccer mom cars, space should be, that's a word. And then you've got like, hey, I still want

11:03 what I have. It's like, for me, for instance, I like, I've got a one year old and wife and I have no idea that when you have a little, I don't know, 23 pound human, they come with 4, 000

11:16 pounds of crap. And so I didn't know that it was not in the owner's manual when he was born. And so we have to have an SUV. And but I also need an SUV, they can get to like visit my brother in

11:27 Fort Worth. And so I need a long battery. But like looking down the list, like the Rivians like 96 grand, the Tesla X is like 120k, like still running a startup here, ladies and gentlemen, like

11:40 not exactly - I'm gonna add that liquidity - My Ferrari budget's a little low. So yeah, you've got to do that and you've got to make one for the everyday people. They said the average EV in this

11:51 thing, I think includes hybrids is 54, 000. We got a Jeep Compass that we got for like a little under 30. Like that's a big, big jump there - Well, pre-pandemic, we sold 7 million cars a year

12:05 in the United States give them take six million of them were 40 grand or less. Yeah. So if they want to make the average 10 of 50. So if

12:15 they want to make the average 10 of 50. Yeah, you gotta find something. The penetration rates, you gotta get it down below 40 if you want to hit that. But the EV thing is crazy. Like I remember

12:22 in high school, like laying out all the like motor trend and like road and track and everything. And we'd all set the lunch table and go through me. This one cracked like four seconds, zero to 60,

12:32 whatever needs like some souped up like quarter million dollar car. And now you get the Tesla like model three, like the cheap one that the every man car. And you like tap that thing and it's just

12:43 done. It's just off like a rocket. So yeah, I think from a performance standpoint, not having to get the oil changes, the like all that. Yeah, I think it's great. I think I think it's

12:52 definitely going to hit. But back to what we talked about earlier, power lines are still the same. So my whole street gets some, your whole street gets them. You all roll in at six o'clock and

13:04 you're like, yeah, I'll go ahead and plug it in. You're done. It slides out.

13:10 And so that's where you've got to have somehow people at home understanding the different signals of like when they shouldn't, shouldn't be doing things. So I think - And then that have to happen at

13:21 an AI level and not a human level - Oh yeah - Yeah, 'cause if I show up and, you know, if you're getting in the way of me grabbing a beer, you know, plugging in, I'm not sure that's gonna happen,

13:34 but are we gonna have, is that where we're gonna go? We're gonna have smart homes where - Yeah - You in effect have something sitting there going, all right, now it's time to charge this, now

13:44 it's time to shut off the refrigerator - Yeah, I think that's, it has to be that. I'm not gonna text you, like, Hey bro, it's over 500 to do mine. And you're like, I got people over. There's

13:53 no way like throwing a party, not happening. Like you've got to have that little bit, like if you go out of town, like, yeah, raise your house. Like we just got back from three weeks in New

14:03 York. Guess what? We had the house on 85 'cause it wasn't like. but I had to do that by hand for whatever reason. They didn't put a smart thermostat in the house. And so I had to like literally

14:14 go push it to 85, but you don't want to like manually do that. And you don't know when you're not sitting there hitting refresh, like, you know, when it's hot outside, but if it's really hot

14:22 outside and there's like 10, 000 megawatts of wind, it's not a big one. It's not a big event. If it's pretty hot outside, but there's a bunch of power plants out and there's no wind for the day,

14:35 then like out of nowhere, you think it's fine And then the price goes through the roof. So that's where it's a little different. You've got to be able to tell the everyday person about market

14:44 signals, which is what I think, that's also what gets us to like, like on the path of like the energy transition and all the like net zero goals that the country has - So how far off are we from

14:59 that? Is that five years, 10 years, 27 years, could do we, does the technology exist today? It's just costly. Where are we if you had to handicap that? Let's see, we're in 2022. I think that,

15:15 I think about 10 years, I think you could get there. 'Cause the other thing you've got to think about is like as with smart appliances and things like that, when do you plan on getting a new

15:26 refrigerator? Yeah, good. I have no clue. Yeah, never. When that one breaks. Yeah, never exactly. When the beer is hot. Yeah. And so, great So if you don't have one, or you may be like,

15:39 okay, we're gonna move this one to the garage and then like whatever. But like at the end of the day, you've got to wait for these things to take its natural progression. When are you gonna get a

15:47 new car? Yeah. I'm gonna like when this one breaks, when like kids start striving, you gotta do a hand-me-down, like whatever, you're not just gonna like trade it in every six months or whatever.

15:59 And so I think that's the thing is you're gonna have to have that full life cycle. So I think like a 10 to 12 year stat. like standpoint is helpful. And I do like what's happening with the

16:10 inflation reduction act because now it's saying like, hey, it is expensive. Like it is pretty expensive. I had a really good deal on my electricity and sadly the contract ended. It was from one

16:21 of my early clients. And so now I have less of a good deal. It's still like very nice hookup from one of my clients but it's getting expensive. And so before that I wouldn't think about putting

16:35 solar on but also if I had an EV, which I'm considering, then and I had solar on my roof. Okay, great. And like some of my appliances are pretty smart 'cause the home's pretty new and like some

16:46 are just not. And like the thermostat, no clue how they stuck that in there instead of a nest when they built the home. And so yeah, you just kind of look through these things but what I like

16:57 about it is that they're like, Hey, I'd like you to buy a clean car. Here's 7, 500 to do it. And you're like, 54, 000 minus. 7500, like, all right, like it's a little bit easier, right?

17:09 You know, like 56 or 46 and a half. Ah, that makes it a little easier. Like, solar, I'm not sure if I'm gonna put it on my roof. Hey, we'll do like, here's the overall cost savings, plus 9,

17:19 000 and you're like, hmm, okay, this is a little more advantageous. So that's the type of thing, 'cause it's expensive to outfit your home to like fully do all of this. And so that's why places

17:29 like California do it first, because it's a really fricking expensive to have electricity out there So they're dealing with a number that's like two or three X, what ours is for the end user. And

17:40 then we're like a low ball, but now ours is getting higher. So we need to start paying attention. Yeah, you know, I think dad, so dad put in solar panels and the Tesla batteries at the house

17:53 just 'cause my dad's the early adopter. Dad bought the first VCR ever made, but then he never upgrades. That's always gonna be - Still watches the VCR. Yeah, so anyway. He got solar panels and

18:06 the Tesla batteries, and his payback was about 123 years - It's a long time - It's a long time. And you know, my comment to him was like, Dude, you're 80.

18:17 So I've told this story a million times on the podcast, but I'll tell it again. So winter storm Yuri, I'm sitting there in Richmond and I'm in between the police station, the fire department, and

18:28 then whatever poly oak bin hospital. So I think I'm never going down, right - Yeah - I'm on the part of it, boom, goes down. So I show up over at my parents house, I got my cat in my cat carrier,

18:40 bag under my arm, walk in, sit down and dad under his breast like 123 year payback. Doesn't sound so bad

18:49 right now. It does it. It's like, all right, fair enough dad, but - That's pretty funny - Yeah, no, it would be, so I think, I'm gonna make this as a statement, but you correct me if I'm

18:57 wrong. So everything that's happened on kind of the residential side, what you just said, your bill is half of what your parents. is same size house - Yeah - Had to

19:08 have happened on the industrial side as well, maybe even exponentially more just 'cause there would be more savings - Yeah. I

19:18 would say it definitely does, but there's only like so much you can do. Like if you have a brewery, then it's really thirsty - I brought a beer first - You did bring a beer first. But yeah, so if

19:30 you have a brewery, so you're sitting over there and you're like run car block, right? And so like there's not much else you can really do to lower that. You can do a little bit. So where that

19:42 comes in, here's the big thing. So we have in Texas and you probably covered this with Campbell before, you have four CP. So four Quinson-Ope peak. And so that is, there's 15 minute period, one

19:55 in June, one in July, one in August, one in September and they look if you're a commercial or industrial client and see what your usage was. So that's the highest load on the grid. So when we

20:06 tapped over 80, 000 megawatts on the grid, it was that 15 minute interval, the biggest one for each of those four months. So each of those are worth a quarter. And then that's how the next year

20:16 center point tells you, this is what your transmission or like TDSP charges going to be. So if you act appropriately and you have some flex even at a brewery, like you don't let the beer to go cold,

20:29 but nonetheless, you can also like stop, like stop manufacturing, stop canning, all of that. So you say, hey, I normally use five megawatts. I can take that down to one. And then center point

20:41 will be like, man, there are great guys over there. Like they only use one megawatt. So then they get charged on transmission for one megawatt for the rest of the year. They're normally at five,

20:53 but because they were well behaved, those four 15 minute periods, then they get a huge, huge savings So that's the savings that you can do. here as a commercial or industrial client. So on the

21:06 energy efficiency side, it's less so 'cause like you're making beer, you still gotta make beer. But that's where you can come down. You can massively back down your transmission by telling Urcot,

21:16 look, when things get tight, I'm happy to be like a good advocate for the grid. It's essentially you're selling insurance. So you're like the insurance provider for Urcot. And you can even submit

21:27 into these demand response programs. Then you have to back down when Urcot calls you And so Urcot will call and be like, car block, like back down. Stop making love street. You're like, oh,

21:37 okay, great. And so they'll do that and then you'll back down to the predetermined amount that you agreed with Urcot on. And they pay you as an insurance provider. So that's where commercial can

21:47 really, really be a good steward of the grid. So I think there's about, I think it's a big two way, but like, I think it's like 3, 000 megawatts on the grid. They can actually like back down

22:00 And that's also what these data centers, Governor Abbott is trying to draw these data centers in because the data centers can instantaneously almost be like stop mining and then just drop down. And

22:15 so there's like, I think it's like three gigs in the queue for data centers as well. Yeah. So I had Nathan Magoo who is a CFO of BASA, which is an oil and gas producer, but really their focus is

22:28 water floods And I don't know if you know much about how water floods work, but think just a massive plumbing operation. Okay. We're like one percent of the fluid, you're skimming off as oil and

22:40 99 of its water. Okay. So you know how you get soap out of a sponge and run a bunch of water in there and you squeeze it right to get all the soap out. That's kind of what a water flood is

22:50 underground, if you will. So think of a big plumbing operation, tons of electricity, right? And he came on, because what he wanted to talk about is he's like, hey, I was in the Lars program.

23:03 for Urkot every year, right? And they would call up and they'd say, hey, got an issue for a couple hours, please shut down. We'd do that, we'd get paid, you know, we worked out great - That's

23:14 a great program. That was the first gig I ever had, was managing that at Tenaska - Oh, really - Yeah, so how all these big massive plants, and that was awesome - Well, what Senate Bill 3 from

23:25 2021, the response to your, that makes everybody winterize and stuff, came in and said is, if you produce more than 50 MCF of natural gas, you were deemed critical - Yeah - And part of the Lars

23:40 program, one of the things you have to qualify is you are not deemed critical by anybody. So all of a sudden these massive water floods that have loads of 25 megawatts, 30 megawatts, 35 megawatts,

23:54 but they make 52 MCF of natural gas - Oh - We're deemed critical - Yeah, yeah, yeah. And so, you know, the railroad commission. just blew that, right? It should have been, hey - It's kind of

24:06 what the railroad commission's good at. Yeah, exactly, blowing, though. Yeah, but anyway, so what the railroad commission should have said was, hey, if your load is way more than the gas you

24:18 produce and we'll figure out some metric to convert it on, you're not deemed critical. Their claim is we're going to figure this out kind of through the hearing process. But the flip side is does

24:31 somebody want to spend half a million million dollar in lawyer fees to go through a hearing process when it's like, I don't want to shut down anyway. Yeah. And so the Lars program had about three

24:44 gigawatts participating in it. And after Senate Bill 3 passed and all got down below two gigawatts participating. But - Yeah. And I don't know if this is an anyway, shape or form has anything to

24:58 do with my podcast But post the podcast, I think we're back up to like two, six. or something. And the railroad commission has started hearings on it. It's getting better. But yeah, no, it's

25:11 interesting you brought that up because I actually think there ought to be a large program for every single user of electricity on the grid that that it just doesn't seem to me the technology should

25:22 be that hard. I mean, you guys are forecasting it. Yeah. So we know it's going to happen. We ought to be able to have the smart house say, all right, Chuck, sorry, but you told me if I could

25:34 save X amount of money, I can take the house from 68 degrees to 75 for two hours. And but it's been that way for 20 some odd years and it happened. So there's a little bit, not really in Texas,

25:46 but like California has a program that like Tesla created a program that just went and they're like, Oh my gosh, this is what we did. And I was like, Oh, I'm connects been doing this for a long

25:55 time. Like they were they were kindly in our like series a press release. Awesome company. And so they go in and they aggregate homes. and then tell all the homes like, Hey, if you do, like,

26:07 Chuck, Sean, if you can do this for me, I'll pay you this. And so they put all of it together. So they've been in Texas for a little over a year, really cool company. And so yeah, it's

26:17 possible. You can go become a user at Home Connect. I know that they have like an investment from Google and like because of that, they've had like Nest thermostats that were handing out so they

26:26 could monitor and they've got little things in your house where they can actually kind of like not overly take control, but like a little bit take control. So yeah, there's companies doing this.

26:37 Urkod as a whole, they don't have the technology and they'd have to like, it'd have to be like the next generation of smart meter that also lets people take like control of the house a little bit

26:47 and then you've got all the like Texans that are enemy of the state fans and they're like, They're not taking control of my house - Right - So I mean, yeah, there's programs out there that's

26:56 companies doing it. And like, Home Connect's one of the best ones, think of in our world it's called VPP virtual power plant. And so it's exactly what it sounds like there. You're by backing down,

27:07 you're creating that excess. And if you create that excess across tens or hundreds of thousands of clients and everybody gives a little, then you aggregate it together and it's a virtual power plant.

27:18 So yeah, that's something that a lot of people have paid attention to. There's, I've got something in my inbox that I need to read about like how this bill affects like the VPPs out there. But

27:28 yeah, it's definitely doable And the home, like from an emissions target, getting the home to behave properly is like, the last 20 is what I understand. And so that's where they're like, no

27:41 matter how well we get, 'cause commercial industrials like the gentleman who was on here with like the LAR program, like, yeah, he's like making hundreds of thousands of dollars. Like during

27:52 those events could be making millions of dollars. That's fine. At the home, you sit there and you're like, hey, I need to take my home from like, I'll bump it from like 72 to 74, but like. I'm

28:03 not going to 78 with like a small kid. My wife will kill me and that's not worth six bucks. And so I think that's where it is. But I would be like, don't charge my car. Like don't run the washing

28:14 machine, different things like that. So I think there's different, like different degrees that each person's willing to do - That's a good point that maybe there's just not the on a percentage

28:26 basis, you could actually do something meaningful, but at the end of the day, if your electric bill's two, 15, you say - 10 that's 25 bucks - Yeah, so what I like is if they would let you take

28:37 that power and sell it back to the grid, and you could be like, any time it's over 1, 000 a megawatt. I'm totally, that's a dollar a kilowatt hour. And like, that's a big number. Most of the

28:50 like plans right now are in the, like,

28:53 I don't know, like in the teens, like 15 cent range probably. And so if it's at a dollar, be like, I'm selling back. Great. And so I think if you did that and let people like game the system

29:04 and be like, okay, I'm only if we're only if we're at the price cap, we'll lie back down and I'll give you that entire spread. That's where it's interesting. Or if like electric vehicles become

29:16 like bidirectional charging where you can say, hey, instead of I've got all this juice in my car right now, we're full because I charged last night and haven't gone anywhere, then you can push it

29:26 back to the grid. That's what I want to do Obviously, I was a trader for a lot of my career. So I just want to sit out there and find as much arbitrage as possible. But that's what people are

29:36 doing with like electric buses, for instance, electric buses are great. When do kids go to school? Like, I don't know, 7 am. to like buses should be like hard stopped on by like 830. So then

29:49 if you had that and then like when do they run? Okay, great. You've got like the afternoon, but the whole rest of the time you can sit there and like act as a battery on the grid, that's

29:58 something I actually find interesting. If you can use your car from a bidirectional standpoint and make money arcing the grid, essentially - Well, that was, I forget what charcane it was, but my

30:10 mom called me and being a good sweet mother, make sure you have batteries and blah, blah, blah, and all that. And back when I used to drive a Tesla, I was like, Mom, I got the greatest battery

30:20 on the planet. And if I need to go charge my phone or do whatever, you're right. 'Cause it's, so back in the late '90s, early 2000s, when I was doing power technology type stuff, the whole

30:34 thought was, 'cause the way the grid works and everybody knows this is you have one day, and it's usually in Texas, it's in August where you've got the huge demand. So you gotta have powerful that

30:46 'cause it's an effect that really is no storage. So the peaking component of it, one company we almost invested in, its whole mission was you got all these backup diesel gym sets everywhere that

30:59 sit around and do nothing. all year long, let's just kick those on for the hour that we need it on that hot August day, or whatever the case may be, is 'cause so you've taken it the next step

31:12 further, and so it's car batteries, but there's a lot of generation out there that's back up that's never really used - The best thing, I forget when this was, this was a couple of years ago, the

31:22 grid was just like, you see the Urcott map on the website, and it's color coordinated, and when it's dark red, you're like, we're screwed - Sure - But for Mosa down in like South Texas, the big,

31:33 I guess, chemicals company, they literally, they flipped everything and like pushed all their power out, and so you have like, you have like the old, like the map of Texas, and like right here

31:45 was a little dot that was like green, and everything else was just bright red, and they're like, we're taking care of our people, we're good stewards, and I was like, respect, like this is the

31:54 coolest thing ever, and obviously like the big evil chemical company, save the entire neighborhood. What's up? So I thought that was pretty cool. So yeah, if you're big enough and powerful

32:05 enough, if you're got the ship channel to do that or something, you're absolutely right. Like there is that capacity somewhere that we can like, we can make this work - Who would ultimately be in

32:16 charge of making that hack? And is that Urkot that ultimately - Oh man - 'Cause at least back in the late '90s, the problem was is you had a local utility - Right - And they were fully vertically

32:27 integrated They had generation, they had power lines, and then they went all the way to the house. And they, you would think you were trying to steal their children if you said, Hey, I wanna be

32:39 able to sell back into the grid. Oh no, it'll blow up. You know, all these rogue generators. And I've talked to some networking type people that are like, No way, the technology's pretty easy.

32:50 You can sell power back and forth. It's few inverters and it happens So who actually is stopping? from happening to the yes. I still think it's the technology. I still think it's just not there.

33:04 And yeah, there's definitely not like our card like their goal is like keep the lights on. And so I always picture like their cock control room is like you're a watch like Rudy and like Notre Dame

33:16 and they go through and like they hit the sign of like play like a champion like every utility is like don't let the lights go out like don't kill grandma. Like I'm pretty sure they just like have

33:25 that sign like walking in. They're like this is the goal today like keep the lights on play like a champion. And so I think that's all they're focused on in this next stage of like how we actually

33:35 make the grid more resilient and all that. I just I think it's the thing like part of the reason that amperon's been successful is I don't even know what the overall value of our client base is but

33:46 it is

33:50 it's in the hundreds of billions like of the companies that we work with like if you look at their market value, right? Our company is not worth that. But we're able to, there's almost 30 of us

34:01 now. And so we started with two, we were at 14 at the beginning of the year and we're, I mean like four hires this week. So I think we're at 30. And so we're able to do things that like one of

34:12 our big clients, I think they're worth like 40 billion. And we've been able to do stuff that they're not able to. And so it's because the, in startup world, you can be fast and nimble and make a

34:23 decision and like hire the top talent because you can tell them that you can let them work in Texas, and Australia, and if they want to work remotely, we let people work remotely before it was cool.

34:32 And so you have this talent that isn't gonna go work in the utility. And so they, that's where I think the differences is that the utilities job is to keep the lights on. It's not to be innovative.

34:44 It's just like, don't screw up. And so I think that the innovative people are the me of the world and like why I'm definitely like passionate about more venture capital getting to Houston. 'Cause

34:54 if we're gonna fix this whole energy transition mess, All the talents right here. All the people who know how energy works, like live in Houston. So we're like, we're the ones who should fix that.

35:06 So that's why I think also is just like these big companies, you just can't like, you can't get done. You can't get stuff done. You have a meeting about the meeting for the meeting, then you have

35:17 the meeting. And you have the post meeting. And then you're like - Circulate the notes from the meeting - Circulate the notes. Like who, oh, we didn't take notes. We gotta redo the meeting And

35:25 so that's what just, there's no bureaucracy and startup land. And so you get to go out there and just get stuff done - So, you know, we used to always say when I was running, when I was running

35:36 the private equity firm was, you know, half our job is to make money. The other half is to not look stupid, right? And so, you know, if you're a Urcot and the lights go out, you look really

35:46 stupid - For sure - So this is not how they wanted to get popular - Exactly - Yeah - Come on, you moved the company from New York back to Houston and. I have a big belief that all energy companies

36:01 need to be in Houston. What was the thought process there?

36:06 Yeah, I mean, Houston's very, very business friendly outside of the fact that our customers, we're here. We got an 11 raise on our take home because of no state and city taxes from New York.

36:20 It's easier to hire here. Like the cost of living is so much better. I mean, all the energy talents here So we have, yeah, of our roughly 30 employees, I guess, Ader in Houston. So we actually

36:33 like flew a couple of people in. Our next biggest makeup is Boston. We've got a few people there and then our Boston, New York, I think there's three people in each. And then we've got people

36:43 overseas, like everywhere. So we started the company remote and then again, remote got cool. Like, and so, but when COVID hit, we were, we were hit firing on all cylinders from like day one.

36:55 Yeah, but Houston just, it's a great place to have a headquarters and again, half my client base is here. So I can very easily like see them go like they're all, I mean, our office is in midtown.

37:06 I get to, I don't know, dozen clients in five minutes. Well, and you said earlier that you

37:13 had to almost start in New York to be able to attract money, but that that's changed. What do you think? That's changing. Changing Yeah,

37:23 in New York, there's a very, very vibrant venture capital scene. And so that's something that I'm very passionate about. We found a great, like we could not have had better first investors, Nick

37:33 and Alex from notation capital, they're in Brooklyn. And so they saw us and they were like, Hey, this is a good founder fit team. We think energy's interesting. We know nothing about it, but

37:43 we're interested in it. We think that this is going somewhere. And so that was the thesis My co-founder Abe has had no background in energy and he said, Hey, I like time series that this is where

37:54 everything's headed from the energy standpoint. And I'd see an old archaic industry. And I saw an old archaic industry

38:04 and that needed technology. And so when in New York, you saw these people and everyone's like disrupting and co-founding and like all these things like starting companies that are like apps and like

38:15 selling advertisements. And they work at Google and they work at Facebook and all that. And I was like, so the grid's a real problem Like not to take away from any apps, but I lived my life for a

38:26 long time without any apps. I've never lived my life without electricity. And so what if we took this really talented base of engineers

38:37 and brought them to Houston and let them work on the types of problems that we're dealing with just with the grid? And so that's what we've done is we've hired these top engineers and data scientists,

38:49 but then we're answering problems but the big clients. like our big clientele here are paying attention to. And so, I mean, here's the basis of you've got, I mean, everyone, you look downtown,

38:60 it's like Shell, BP, Chevron, like Exxon, like everyone. And so yeah, we've just now that data science talent, that data engineering talent, wasn't here. But unfortunately, we have not had a

39:14 ton of success hiring for technical skills in Houston. We, there's commercial people for days and days. We've hired some of the top commercial people in the industry to come work on this problem.

39:27 And but we're still getting better on, on the tech side. And so there's a thing we just started like, I went to AM and so called Aggies and Tech. So Rice does a pretty good job on the technical

39:39 side. Their business fair or the business playing competition is unbelievable. AM's doing a good job. Now I was just there last weekend in college station for a trip, trading risk investing

39:50 program. And so they teach them to be like. really high-end analysts, but they teach them Python, which is like the best language that everyone should know, especially people that are in their

40:02 20s and coming out looking for jobs. But then we just founded, kind of Jesse Martinez founded Aggies in Tech. And so he's like, Aggies need to know that if they wanna work in tech, they don't

40:13 have to go to Silicon Valley. They don't have to go to New York. Like there's a home for them here, a much cheaper home. And so just bringing that tech talent back is helpful, but also if you go

40:23 to venture, that tech talent will eventually wanna start companies. It should wanna start companies. That's who you want starting companies. And so you have to have that venture capital there to

40:33 give them an idea. We raised 860, 000 off of just an idea. And notation was the one there to help us raise that round. And it spurred this. And now I employ a bunch of people and we have a good

40:47 bit of revenue and a bunch of clients and saving people. I mean, millions upon millions of dollars, especially in these crazy events. And that was all because of like an 860, 000 check from them

40:59 and a few other people. So Houston needs to understand that if we're gonna like fully embrace the energy transition, people need to fund it. And so everyone here knows what private equity is. Like

41:11 obviously that's your background, but those checks are like have lots of zeros on them. Sometimes to see if you have product market fit, you just need a million or two million bucks. You don't

41:21 need like 50 or 100. And so that's where like venture really comes in. And so that's one of the things that I like that Aggies and Tech is hopefully bringing in a green town lab showing up here and

41:31 like the ion showing up here is unbelievable. Like just the cannons next door, just the fact that you now have all these investors who are writing these smaller like checks and angel checks, but

41:42 giving people a good valuation and saying like, let me help you along the way. So that's definitely what I. That would probably be my next act is going like help early stage companies just because

41:52 I've been fortunate to have some good people help me, but Houston should not be as where they're ranked in venture capital funding. They're really high in private equity and really low in venture.

42:02 Yeah, I think what happened is kind of a couple of things. One, it was really natural gas partners that created private equity and it just gravitated to oil and gas For sure. And you have some

42:15 success. What do you have? Copycats. So you had quantum end cap at all, everybody else joining and it just got niched in there and you had LE Simmons and First Reserve kind of doing oil field

42:27 service. And that's just where it built up. And then I think what happened just kind of technology wise is enough talked a lot about this on the podcast too is oil and gas companies just have a

42:41 tendency to be lottery ticket businesses. Yeah, meaning if I can drill horizontally. into a modern frack, I will spend all the money in the world and I will become so great at that because that's

42:54 a lottery ticket. All of a sudden I can be rich overnight - Yup - Digitizing my land files so that I can shave 10 cents off a land transaction. And that's boring, I'm not gonna do that. So I have

43:07 paper and pen. And so we've just been kind of behind the eight ball on certain aspects of technology because nobody was doing that, the oil and gas private equity guys never had any venture - Yeah -

43:20 Type opportunities - Makes sense - So you just didn't build that culture, you know - That makes a ton of sense - Austin kind of has more of that culture and you had Austin ventures pop up in early

43:31 days and all, but that's what a - Yeah, that thesis makes a ton of sense and it does, but again, there's no reason we can't change it. And so again, with the, with from energy, like Houston,

43:44 I think especially energy is really good on a B2B standpoint from a business. side, but Austin's really good at like business to consumer. I know they've taken some like big Houston companies and

43:54 like it's that's the great city for like business to consumer whereas like we can still be like the business to business and obviously they're gonna the Houston Austin fights always gonna happen.

44:03 Dallas never really showed up to the fight in the venture game. I don't know why. So that's all right. We don't like Dallas. That's fine. They I love that meme where it's like, you know, let's

44:15 build a wall and it's walling Dallas off into Oklahoma. I'm totally down with that. I was born in Dallas. I shouldn't say that. But now I think I think the when you just look at energy and kind of

44:30 like the whole history of energy. We were talking a little bit about this earlier is you really can't transition unless you leverage the existing infrastructure. Yeah. And I mean, I think if we

44:45 think we're going to have a hydrogen base to come. Okay, that's great. How can that happen in Boston? There's nobody that runs a pipeline company in Boston - No - And pipelines are potentially

44:56 gonna be used to move hydrogen around, or whatever the case may be. So it's gotta happen here. And I do think the greater Houston partnerships have been really good about - They did a great job -

45:07 Bobby Tudor's done a good job of - He has for sure - And James Strickor's great. He's kinda in charge of it - Yeah, Bob Harvey's how I got involved with that And he's CEO over there, and Bobby

45:18 Tudor does a great job as well. But yeah, he literally, I sent him an email when I was a junior senior in college. And it was like, Mr. Harvey, you are the best Aggie in energy. Like, what

45:31 should I do when I grow up? And so he took me to lunch over and like waste his table and sat me down and was like, Hey, this is blah, blah, blah. And so we reconnected, I don't know, probably

45:41 five, seven years ago. And so it's been great to work with greater Houston partnership just know that like a city like. has advocates like that. And also people of that caliber of the Bob Harvey

45:50 Bobby Tudor. Like, I mean, the fact that those people are giving their time to like help make the city great is really, really impressive. Yeah, I've always, you know, I've always said, say

46:03 what you want about using it. It's an ugly city. I mean, right? It's basically flat. It's flat. We made all our money in the 80s. So we're still getting right of all the green glass buildings.

46:13 Yeah, we have the climate of a third world country. I say all that. But I do say to anyone that'll listen to me where I rhyme, no greater people on the planet. Yeah, no greater people and now no

46:26 greater food. The food is unbelievable. Totally. So yeah, it's we went to an awesome dinner last night because my whole team was here and like the 10 of us went and I was like, man, this is

46:37 great. And like, yeah, the dining scene here is phenomenal I've lived in New York and Chicago and Dallas. And it's not like each city has its own. especially like New York and Chicago has its own

46:49 like nuances in the food thing, but using indefinitely hang. So no, it's been, it's fun to do that. Time magazine, Time magazine voted us the number one food city in America. I actually love

46:60 New Orleans, above Las Vegas. Man, above New Orleans is that's strong. Yeah. So I love New Orleans food. All right. So I'm going to put you on the spot to close out the, the podcast Give me

47:12 two predictions for what we'll call power technology. Give me a five year prediction that I haven't heard any other place and give me a 10 year prediction of just something. I've given you something

47:28 so wide you drive a bus through it. So I haven't pinned you down that bad, but I have put you on the spot. A five year prediction and a 10 year prediction. All right Five year, this may be like

47:41 wishful thinking. Okay. I think in the next five years, we will not. see another blackout event like we saw in February 21. So I think that our content a good job of managing things this summer

47:57 for how hot it was. This summer was the like hottest on record since like the 1890s or something like that. And so they did a great job managing the grid. And now with the winterization of a lot of

48:11 the units and things like that because the issue was with gas and the fact there was no wind because wind turbines were frozen and all that. I do not think in the next five years we have another like

48:21 event like that with the complete and underlight. I like that prediction. All right. So I'll go there. I'll take the under but go ahead. Again, my view wishful thinking but you know that was

48:31 great. We were six months pregnant that time and lost power for 48 hours. So I'm also yeah maybe in in trader world we'd call that talking our book. Yes. So a 10 year prediction. Let's see. We

48:43 are in 22. So in 32,

48:49 I think by

48:52 2032, I think Houston will be a top 10 venture capital city in the United States. So - So give me two things that need to happen for that prediction to become true. What do you think we're missing

49:08 now? We've obviously brought up some good steps. We've made the ion, the green town labs. What else do we need to be doing - I think part of it is just in all honesty, valuations,

49:21 they need to have fair valuations that give the person who's taking the risk, ie. the founder, to put them in a good situation. People in Houston, because of private equity, are used to saying

49:33 like, what is my return on this - Three times even the job, boy, what's wrong with you - Exactly. So I think that they need to work on that and understand, like, yeah, we got given three

49:42 million, like 3 million of evaluation for an idea. And if we hadn't of, so we're like, okay, great. You got to sell, I mean, the going rate is 20-ish percent of the company per round,

49:53 especially in the software base, because we don't have hardware. But I think valuation's getting better is one of the things. And then I think that you need one of the big players to make an actual

50:06 stake in this. You need a Sequoia and recent, like a Google Ventures, a someone like that to come here and be like, we're doing this And so open an office and basically, because everyone follows,

50:19 everyone just, everyone follows especially in every space, but especially in BC. Like for us, we went around and we had an early commitment from someone who is in our around Riverstone out of

50:30 their Austin office, which is great. And then we got a term sheet and then they just came, we got an offer and then the term sheets kept coming in and then people kept wanting to invest in the

50:42 round So once you got that sign off. then like, oh my gosh, like HSBC led the round. And then like a bunch of other people were involved, but we got to turn away like a bunch of money, which was

50:53 great because everyone's like, oh my gosh, they said, Ampran's a good idea. We're all going that way. So if I'm Andreessen, like

50:60 Union Square Adventures, like someone of that clout, when you hear like, this is who it is, then like that I think would be the step. So if one of them moved and said, We're gonna open a Houston

51:12 office and we're gonna like actually like make a presence, there may be one that has a Houston office, but actually come here and make a presence, then I think that would really change the game.

51:22 'Cause everyone follows. If one of those like massive multi-billion dollar like

51:29 VCs set down foot, all the rest would be like, What if they see that we didn't see? We've got to move to Houston. And then everyone would just follow suit - So Mark Andreessen, you're welcome to

51:37 come on the podcast, come to Houston, we'll feed you - Very sure very well. And, you know, it's been two some odd years that I've been unemployed, but I'll work on my resume for you, Mark.

51:49 Shawn, you were great to come on. Hey, this was awesome. This was a lot of fun