How two college friends launched a company that has helped save 32 terawatt hours of energy and more than $3 billion in energy bills

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The founders of Opower, Daniel Yates and Alex Laskey.
Brooks Kraft | Corbis News | Getty Images

In this weekly series, CNBC takes a look at companies that made the inaugural Disruptor 50 list, 10 years later.

Before Alex Laskey launched an energy efficiency company in 2007, he was primarily working on political campaigns, “almost exclusively losing campaigns,” he told CNBC in a phone conversation in June.

Towards the end of his early run in politics, in 2006, Laskey worked in public opinion research and political polling about voter sentiment on, mostly, environmental and energy issues, and that work catalyzed Laskey’s awareness of and sense of urgent desire to respond to climate change.

The political opinion polling also taught Laskey that while “climate change” was a highly politicized issue in 2006 (and still is, according to Pew Research Center), that even back in 2006, almost all American voters agreed with the idea of “saving energy” and not being wasteful, Laskey told CNBC.

As these learnings were percolating for Laskey, he reconnected with his college friend Dan Yates, who had in 2004 sold his education software company Edusoft to Houghton Mifflin for $40 million. The two decided to work together on an effort related to the environment and responding to climate change. In January 2007, Laskey and Yates committed to spend a few months testing out some ideas and seeing how compatible they would be working together.

The startup that Laskey and Yates would go on to launch was Opower, which shared energy efficiency recommendations to customers through the utility companies that serve them. In 2014, the energy efficiency company went public. Two years later, it was acquired for $532 million by software giant Oracle. Today, Opower is still operating within Oracle as a part of its utilities-focused business, and is still being run by an early hire, Matt O’Keefe.

For Opower, which appeared on the inaugural CNBC Disruptor 50 list in 2013, being acquired helped the company accelerate its impact, building on the back of Oracle’s software strength. Since 2016, Opower has tripled the amount of energy the company has been able to help customers save. Households that get energy from a utility company that uses Opower’s energy efficiency recommendations have saved more than 32 terawatt hours of energy savings. Before Oracle bought Opower, the company had been able to save 11 terawatt hours of energy.

The 32 terawatt hours of energy can be an abstract number that’s hard to contextualize, but here are some real world constructs: a terawatt is a trillion watts or a thousand times bigger than a gigawatt. A gigawatt can power 3.125 million solar panels or 110 million LED lights, so a terawatt is a thousand times that: 3.125 billion solar panels or 110 billion LED lights. That 32 terawatt hours of energy savings Opower has been responsible for translates to saving customers $3.3 billion on their bills.

That 32 terawatt hours of energy saved means 16 million metric tons of carbon dioxide emissions have been avoided. That too can be hard to grasp in any tangible way, but for context, a metric ton is 2,204.6 pounds and a metric ton of carbon dioxide would be held in a cube 27 feet on all sides, which is about the length of a telephone pole, according to Massachusetts Institute of Technology’s database of global warming information.

How the idea for Opower came together

A few “aha moments” helped coalesce and guide the creation of Opower.

First, Laskey had a “pretty old, beaten up Honda Civic” and Yates had a much nicer Toyota 4Runner but when the two would go on double dates with their respective partners, they would “pile into” the Honda Civic, even though the 4Runner was more comfortable, especially for four people. That decision was, at least in part, driven by their desire to not waste gas. And while it was easy for them, and most everyone on the road, to know the gas mileage of the cars they were driving, or not driving, they had absolutely no sense of how energy efficient or inefficient their apartments in San Francisco were relative to their neighbors.

“In other words, we could be driving a Civic or Prius, but returning to Humvee homes,” Laskey told CNBC. “And we had no idea. And not only did we have no idea but nobody else had any idea.”

At the same time, a professional acquaintance they were speaking to about some of their ideas introduced them to the work of behavioral psychologist, Robert Cialdini, who presented the idea that the most powerful tools to influence behavior are when an individual is presented with a normative comparison, or the idea of comparing an individual’s score, ranking or performance to the average of the group.

Laskey says another iterative step toward launching what would become Opower was when Google announced it was going to put solar panels all over its office buildings. That announcement from the tech giant was on the front pages of several newspapers. And at the same time, Laskey was reading about a program to replace refrigerators in low-income housing with energy-efficient refrigerators in New York City, a program that made a “real impact, a material impact” on energy savings and money saved for residents.

“We did the calculations and realized all of the energy that was going to be produced by the solar panels paled in comparison to the energy that had been saved and was being saved by these refrigerators,” Laskey told CNBC. “And, nobody was writing about the refrigerators.”

The “boring and unsexy” domain of energy efficiency was an “overlooked opportunity,” Laskey said.

(L-R) Clean Energy Project Board Chair Rose McKinney-James, Opower Founder and CEO Alex Laskey, SolarCity Founder and CEO Lyndon Rive, View Inc. CEO Rao Mulpuri, Nest Labs Director of Energy Products Ben Bixby and Mosaic Founder and President Billy Parish attend the National Clean Energy Summit 7.0 at the Mandalay Bay Convention Center on September 4, 2014 in Las Vegas, Nevada.
David Becker | Getty Images Entertainment | Getty Images

Getting the utilities on board

Laskey and Yates got started by talking to utility companies and politicians. Energy utility companies have regulated targets they have to meet for saving their customers energy and so Laskey and Yates’ pitch was to build a software product that would help energy utility companies help their customers save energy — and build the customer’s relationship with the utility company at the same time.

Laskey and Yates talked to energy utility companies in California and Texas and were part of an effort to get a bare-bones piece of energy efficiency legislation signed into law in Texas by then-governor Rick Perry. “That was the kind of final kick in the pants that this was a business worth at least trying,” Laskey said.

They signed their first customer in 2007, which was a public utility in the Sacramento, Calif.-area owned by citizens, the Sacramento Municipal Utility District.

Building out their customer base was slow. “The reality in selling to utilities is that these are risk-averse, slow-moving organizations,” Laskey said.

One benefit of building a company with an expressed purpose to save energy is that Laskey and Yates were able to attract employees to work for them who were looking to make a difference in the world. And building a mission-driven company helped recruiting tremendously. Opower employees “left Google and Facebook and Amazon and Microsoft to join us, in many cases taking lower salaries to do that,” Laskey said.

Opower’s mission was lauded publicly by the White House, too. In its early days, Opower was praised by the Obama administration for its work saving energy and President Obama visited the Arlington, Virginia.-headquarters of Opower in 2010 to congratulate the team on the work they were doing. “The jobs of tomorrow will be jobs in the clean energy sector, and this company is a great emblem for that,” Obama said during his visit, according to Energy Department records.

US President Barack Obama speaks on energy jobs as he visits OPOWER in Arlington, Virginia, on March 5, 2010.
Jewel Samad | Afp | Getty Images

Opower inside of Oracle

For the decade he was building Opower before selling it to Oracle, Laskey spent 160 nights a year on the road. “I didn’t want to spend the rest of my life on airplanes all the time,” Laskey said.

And Oracle was a logical fit for a buyer. It has an entire suite of products and software that is custom built for the utility industry and is sold exclusively to the utility industry. While Opower had customers in 12 countries at that point and was already a larger company than Laskey “ever imagined we would be,” expanding and growing in other countries was a challenge. Selling to a software powerhouse like Oracle helped Opower grow faster.

Today, Laskey is running a stealth medical device company and he is also running a nonprofit advocacy organization called Rewiring America, which is working to electrify everything, with a specific focus on inside the home. The goal is that Rewiring America will be successful enough to shut itself down in the next ten to 15 years. “The hope is that within 10 years that everywhere in the country, the default, easiest, most convenient thing to do will be to install heat pumps instead of fossil-fuel burning machines,” Laskey said.

Yates is the executive chairman at Dandelion, a startup that spun out of Alphabet’s X and is working to accelerate the deployment of heat pumps. Yates is also co-owner of a spice e-commerce company and on the board of environmental activist organization the Natural Resources Defense Council.

Today, O’Keefe is running Opower internally at Oracle.

Opower teammates at their first in-person meeting as offices reopened in 2022. Matt O’Keefe is third from the left, back row.
Photo courtesy Opower

O’Keefe joined the company in January 2013 in a regulatory and market development role for West Coast states. Previously, O’Keefe was representing a wide swath of energy efficiency businesses to the state regulatory body in California. “When we were acquired, I found out via text message from my boss on my honeymoon. I was waking up in Japan, with my wife — very, very recently, wife at that time — and it was a really surprising moment for sure. But we had gone public only a couple of years before and so it wasn’t shocking that that was what was happening,” O’Keefe told CNBC.

O’Keefe has stayed on with the company, now formally called Oracle Utilities Opower, because he sees the potential for more impact in the form of energy conservation. “I’ve asked myself each year: Can we still expand our impact? And I’ve always seen that that possibility is there,” O’Keefe said. He reports to the head of the global business unit for energy and water.

Within Oracle, OPower is still making personal recommendations to customers via their utility company based on their personal information, and offering steps customers can take to save energy and money.

“We give specific tips and tricks,” O’Keefe said, like recommending temperature settings for a thermostat, asking customers to run their dishwasher or laundry machines at a specific time, and think about their hot water usage. “Here’s the good news: People want to help. People are willing to commit, and people are willing to make these small actions,” O’Keefe said.

The Opower team in Virginia celebrating Pride Month in June, 2022.
Photo courtesy Oracle

Specifically, Opower recently asked people to change their energy consumption behavior during times of peak energy demand due to extreme weather for utilities including Baltimore Gas & Electric, Burbank Water & Power, ComEd, Con Edison, CPS Energy, Delmarva Power, PECO, Sacramento Municipal Utility District and San Diego Gas & Electric.

Last year, Opower ran a program with National Grid to deliver personalized videos to people explaining the breakdown of their energy use and why a heat pump is a good idea. Those personalized videos have 12 times the rate of success in getting eyeballs compared with Opower’s more standardized versions of energy reports that run online.

And other campaigns Opower run have a more direct focus on saving low-income people money.

“Energy efficiency has always played this role of the workhorse, that fundamental foundation … but it’s always been the least sexy, as well,” O’Keefe told CNBC. That’s beginning to change, as people more and more realize the importance of focusing on using less energy in addition to making what energy they do use be clean. Also, demand for electricity is continuing to increase because citizens are replacing fossil fuel-powered machines with electric options.

“So energy efficiency has changed, and the industry has changed. And the way they view each other has changed,” O’Keefe said.

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