Over 10 years ago, I had the good privilege of launching (and co-founding) arguably the first network marketing + energy deregulation company… and the results were monumental. Our timing could not have been better; as a result, our little retail energy start up was in a very difficult to taper hyper-growth mode. My partner and co-founder at the time would often say, “It’s like drinking water from a fire hose” and that’s exactly what it felt like. Like all successful entrepreneurs know, growth consumes capital, and well, hyper growth consumes it in hyper speed.
As a result of this capital need, I found myself on a non-stop roadshow for the first 12 months doing our song and dance to everyone from well-known west coast VC firms to the prestigious private equity groups on the east coast… and everything in between. In any event, without fail, in every single meeting it came down to one question that we had to answer each time: “how in the heck are you guys growing so fast?” Our answer, albeit with a Cheshire cat’s grin every time, was simple – “we had the perfect mousetrap”. A few years and $2 billion dollars in revenue later, we knew what we had was special.
Today that company has become a legacy company in the world of network marketing and one of the largest deregulated utilities in the energy space. There’s only been a sparse few (1 or 2) that joined in the MLM + Energy fray at that monumental level and then a lot more Johnny-come-lately small players have also come and gone (to which I know about that too). It’s interesting to note that of the top 20 network marketing companies in the world were founded in the 1960’s, 70’s and 80’s; the only two recent additions to that list were founded in recent times and are energy focused companies (with ours being one of them). However and having said all of that, I am convinced that network marketing + energy is no longer anything near to the mousetrap that it once was. For starters, I think the two dominant players; along with maybe 1 or 2 other class B players have completely sucked the wind out the space. I don’t think that there is enough room for new MLM + Energy players… I also don’t think that the marketplace would support it from a representative perspective. A single energy-only offering simply wouldn’t work today. The product and/or service offering needs to be robust, but that comes at the risk of looking somewhat bi-polar.
All of this has made me think recently, where have all the good and innovative mousetraps gone? When we launched that company, the timing was perfect and the people wanted our kind of direct sales opportunity, moreover customers were more than willing to switch away from their incumbent utility company, they just needed a catalyst like our network marketing company to hold their hand through the process. In my humble opinion that day and opportunity has passed; additionally, consumers and network marketing representatives have gotten incredibly intelligent and very decisive; the two elements combined have created a largely competitive environment from every perspective.
So what’s a Retail Energy Provider (REP) to do these days if they want to go after the residential customer group? There’s always telemarketing and door-to-door marketing agencies; but those are short-term game plans with no long-term benefits. There’s little to no (mostly none) customer loyalty built by using those models. I think the next sexy mousetrap is going to have to be completely fresh and new. It should aim to build cult like loyalty and it must have a modernized offering. It will come from the fringes like all good ideas do…
I read in a Forbes article once that the concept of building a better mousetrap no longer exists; today you have to build a better ecosystem. Based on my last comments above, I would agree with this line of thinking. We are living in a world where attention spans are 1/20th of what they used to be, where everyone expects everything for free and it must be easy.
The new mousetrap MUST fit into other parts and areas of people’s lives. I know that it’s only energy, we are only talking about kilowatt-hours of electricity and they all feel, smell and look the same – after all it’s a commodity. In my humble opinion, this only adds to the complexity of finding the next mousetrap, but also increases the reward factor for whomever does figure it out. As the saying goes, “if you build a better mousetrap, the world will beat a path to your door.”