Founder Story: Ari Halberstadt of Catalee on Founder’s Dilemmas and Residential Energy Market

Theresa Shafer met Ari Halberstadt at a Bootstrapper Breakfast in SF earlier this year and was very impressed with his approach to his new startup, Catalee. Ari volunteered to talk with me about Noam Wasserman‘s “The Founder’s Dilemmas” as well as Catalee. Here is a 12 minute podcast and transcript of our phone call.

Or download AriHalberstadt130404b (MP3) 12 minutes.

Sean Murphy:  Sean Murphy here with Ari Halberstadt. We’re talking about Noam Wasserman’s “The Founder’s Dilemma” and Air’s new startup, Catalee. Ari, do you want to take a minute to introduce yourself, tell us a little bit more about Catalee?

Ari Halberstadt:  Catalee is a startup that will help people improve their use of energy, basically reduce the use of energy in existing buildings and save people money at the same time. I’m looking at residential customers and, initially, small commercial market. These are markets that are somewhat underserved but they are quite large. There’s a large number of buildings and they tend to use energy quite inefficiently. Saving can be quite significant, cost effectively. But there are a lot of barriers to getting it done and I aim to streamline that process for the customers.

Sean:  We’ve been talking about Noam Wasserman’s The Founder’s Dilemma. I was going to read a little bit from a short passage on page 331 that I thought captured the essence of the entrepreneurial journey.  He says,

“The path from founding to success is a long and winding one with dilemma after dilemma forcing founders to make decision after decision all with the important, and sometimes surprising, short-term and long-term consequences.”

He elaborates on that, a few pages later, and says,

“At each fork in the road, the decision that maximizes value tends to threaten the founders control and vice versa. There is inherent conflict between maintaining control and building value in high potential startups because the latter requires value added players who demand more control.”

At this point, you’re actually looking for cofounders to help you bring Catalee to its full potential. Is that fair?

Ari:  Yes, that’s right.

Sean:  Can you talk about what you’ve accomplished so far, what the next milestone is you’re aiming for, and where you’re looking for help?

Ari:  I’ve looked at the market, and I’m working on approaches that I think could help consumers streamline this process as well as provide potential investment opportunities. I really need to turn that into a testable product, something that is a minimally viable product as well as find some customers to start using that. I’m really in that transition from idea phase to actually having a product out there. That’s basically where I am right now, and I need people to work with me on that process.

Sean:  When you look at this market, the clean tech energy-saving market’s been around for a while. I think that there’s a general proof of need. What led you to focus in particular on residential and small business?

Ari:   Those are very large markets. The residential one is the largest, particularly the single-family homeowner, where you actually have a person that owns that property and could make decisions. It’s quite heterogeneous.

There are a lot of people out there who are at times neglected. Large companies that can come in and help a university or a hospital set up their energy efficiency have been less interested in helping make it simpler for homeowners to access those resources. There’s a very large market with a lot of potential savings.

The small commercial firms represent a smaller market. It’s still a large number of buildings in the commercial sector, but it also has similar needs to home owners who face challenges finding the right services to get energy efficiency projects implemented. Some of the smaller businesses tend to be quite energy intensive.

Sean:  As you think about how your first offering is going to be both minimal but somehow differentiated from what’s out there, what do you see as the key difference or the two or three key differences between what you would offer and what’s already available to the homeowner or the small business owner?

Ari:  First of all, it would be simpler. The homeowner would not need to spend a lot of time trying to figure out certain attributes of their property. We would also not require too much hands-on, up front, from contractors. The service would actually predict in advance what the energy savings could be for a property. That would help to save time and streamline the process.

It would also lead people through the entire process, which right now is so fragmented that people will try to upgrade and sometimes just give up. It can be a cumbersome and confusing process:  I’ve spoken to people who just gave up because it’s too hard for them to go through the hassle when they don’t don’t see the benefits.

Catalee will connect homeowners with the resources, the people, the products, and the services that can help them:  there are contractors, there’s financing available as well as incentives that can be hard  to actually get sometimes. It’s so fragmented.

Sean:  So in terms of the full product road map, that comes into play even more? You’re looking both for an insertion point and then a way to build out a much richer system beyond that?

Ari:   Yes. I’m looking to interact with the entire system of home building performance. There are existing systems out there, but I want to connect them more efficiently. One of those would be a contractor. Another is the finance, which actually would have an opportunity for investment in these kinds of efficiency gains which, currently, it’s hard for them to access.

It’s actually a system that can be addressed more holistically. By doing that, you actually unlock a lot of additional opportunities.

Sean:  When we talked earlier you felt that your top three strengths were technical software development, an understanding of the science and an ability to look at the problem as a system. Do you want to elaborate on that a little bit?

Ari:  I have a background as a software engineer. I’ve worked in that field. That helped me see the utility in how software can analyze the information. A lot of this problem is an information problem. People don’t have the information. It’s necessary to analyze the opportunities available. There are actually tools out there, but they’re cumbersome to use.  I can look at these things and say, “We need to put these things together.” Software is a way to do that. I have a background as a scientist. That gives me some understanding of scientific processes and thinking. In terms of the system, I look at the problems as interconnected components, not just one small element that often people might try to address.

Sean:  When you look at all the other skills or key skills that are going to be required to build a successful first product, take it to market and close some business, what are the key skills you’re looking for in one or more co-founders to help you get there?

Ari:   I need someone with sales experience, how to develop the sales and products. Somebody, more generally, with business, especially somebody with experience in the energy efficiency and energy field, would be very helpful. That’s an area I think I’m a little less experienced in. They would understand how to sell the products and develop the markets.

Sean:   So you’re looking for folks that have an energy experience or some contact or understanding how that works? The ability to do more detailed financial analysis, as might be applicable to either a homeowner or a small business? And then, sales and marketing strength to help you actually go to market and close business?

Ari:   Yes. Those would be key skills that would be necessary to help the business. I’ve tried to approach the problem from, rather than building prototype software, straight out, I’m actually analyzing the market, getting a better understanding of it. And looking at what existing tools I can start using to build an initial product offering. Or maybe even a service.

Sean:  Is that more what they call a concierge or a Wizard of Oz model where you take existing tools and knit them together?

Ari:  Yeah, that’s actually something that I’m exploring at the moment to see how I can leverage some of the existing tools. There are actually many tools out there or programs for building performance analysis. But they tend to be one off or building-by-building solutions are very time consuming for people to work with. I’m exploring ways to work with the underlying engines, for instance, to make that more efficient and streamlined.

Sean:  Are there any key values you’re looking for in terms of recruiting a team? When you think about shared values or values you’re looking for, what would you say would be one or two key things you would look for in a partner or cofounder?

Ari:  The one thing is I’m very dedicated to dealing with is waste of energy that’s leading to climate change. Somebody who shared that kind of a vision would be important, to understand that that’s a key element that’s driving my interest in this business and where the focus should remain.

Sean:  At the Bootstrapper’s Breakfast we talk about founder who are looking for missionaries or  for mercenaries. So one of the high-order bits for Catalee is you want to have an impact on the global warming problem.

Ari:  Exactly.

Sean:  You’re looking for missionaries.

Ari:   Yes, and I think that these markets are big enough that we could actually have a big impact on a large scale.

Sean:  Well, this has been very interesting. Thanks for taking part. If folks are interested in contacting Ari Halberstadt they can reach him at Catalee.com