London startup Bulb has a bigger aim than trying to convince people to download an app: It’s trying to rethink how energy suppliers work.
Bulb is a green energy supplier, with all of its electricity and 10% of its gas coming from renewable sources. The company says it now has 50,000 customers.
Cofounder Hayden Wood told Business Insider that the idea for Bulb came about during his time working as a management consultant for Bain & Company.
Wood worked within large energy suppliers, but said that he “could not believe what I was seeing when I was working with these companies.” He cited opaque business models, poor service, and the high cost of switching to renewable energy as the three main reasons why he wanted to start his own energy supplier.
Bulb’s other founder, Amit Gudka, is a former energy trader at Barclays. Wood and Gudka felt that customers were being overcharged for renewable energy. The wholesale cost of eco-friendly energy is only “marginally more expensive than the wholesale cost of conventional energy coming from gas and coal,” Wood said. But customers were having to pay a premium, sometimes up to 25% more, for green energy.
Bulb is able to offer renewable energy for a lower price than many larger suppliers, Wood said, because it relies on automation and modern technology. Staff spend around half of their time trying to figure out how to increase automation and speed up the business, according to Wood.
But one side of the business is more retro in its approach. Bulb prefers to train staff up to know lots about the business rather than using call centres or customer service workers who are very specialised.
The focus on training and smart staff works for now — but can Bulb scale it as the company grows? Wood says the company can.
“We think that’s scalable, Wood said, “we think that it’s possible to create teams of individuals who have all of those skills and are able to address customer concerns in one go.”
“So when a member calls us, two thirds of the time that call is resolved in the very first call by the person that they speak with. That only gets more effective as you scale because it will mean that as we get more and more members, we’ll be able to service them with a relatively smaller number of people compared to competitors.”
Bulb’s approach to disrupting the incumbent energy suppliers feels similar to how challenger banks like Monzo and Revolut are attracting customers from big banks. Monzo CEO Tom Blomfield said in February that he has already turned down an acquisition offer from a big bank. Has Wood had a similar approach from a larger energy supplier?
“We’ve been surprised by the level of interest in Bulb and the number of companies that have approached us to partner,” Wood said. “So there’s lots of smaller energy companies who are interested in partnering with a supplier to deliver a service. And yeah, larger companies who are interested in what we’re doing and how we’re doing it.”
Bulb plans to reinvest profits into emerging technologies that support eco-friendly energy. But what happens if the company invests in technology that doesn’t pan out? Companies such as uBeam have been the target of criticism in the past — how will Bulb avoid investing in something that might not work out for its customers?
“That is a very justifiable concern. I think that we have to be very, very careful in what we choose to invest time and money in and there has to be a business case for all of those investment decisions,” Wood said.