#Cleantechers, pay attention to this episode, because it’s a good one. As our readers know, we designed the #ScalingClean podcast to bring you management and leadership wisdom from experienced company leaders. We’ve got a heavily experienced growth company CEO for you in this episode who is lighting up the traditionally workhorse energy efficiency sector.
But first, a bit of context… the climate destruction crisis keeps accelerating, and yet here in the U.S. we waste an astounding 40% of all the electricity we generate. We can – and should – build a lot of renewable energy capacity. But if we keep wasting nearly half of what we produce, we’re not going to move the American economy onto a more sustainable footing.
That’s why those who are driving outcomes in the workhorse sector of energy efficiency are some of the unsung leaders of the clean economy. And today I get to talk with one of those leaders who is avowedly out to build a profitable company and “save the world” from energy waste by eliminating the friction in energy efficiency.
Al Subbloie is the CEO of the energy efficiency as a service company, Budderfly, based in Shelton, Connecticut. Budderfly has 125 employees operating in 49 states with a growth rate of well over 50% for this year. And this is the third company that Al’s built. As Al describes it, he “starts companies, and then runs them for a long time.”
That’s why I know you’ll find this episode rich in lessons on how to build and run dynamic companies.
- Al Subbloie: Business background and career path
- The roles of clean economy CEOs
- A brief history of Budderfly Energy Systems
- Characteristics of a growth-oriented CEO
- 3 qualities young CEOs should focus on
- How a company’s cultural dynamics affect hiring decisions
- Leadership styles
- Why firing will always be later than it should have
- Important decisions and considerations for cleantech CEOs
This is Scaling Clean, the podcast for clean economy CEOs, investors, and the people who advise tahem. I'm your host, Mike Casey. My day job is running Tigercomm, a firm that councils companies that are helping move the US economy onto a more sustainable footing. I get to meet the people who are succeeding at building, funding or advising the most successful companies in your sectors. So each show, we try to bring you usable insights from these leaders so you can apply them to the business of running your business.
Hello, cleantechers. We designed this show to bring you management and leadership wisdom from experienced company leaders. And this episode is one I looked forward to bringing to you. The first bit of context. The climate destruction crisis continues to accelerate, and yet here in the US, we waste an astounding 40% of all the electricity that we generate. We can and we should build a lot of renewable energy capacity. But if we keep wasting nearly half of what we produce, it's hard to see how we're going to move the American economy onto a more sustainable footing at anything approaching the rate we need. And that's why I think those who are driving outcomes in the workhorse sector of energy efficiency are some of the unsung leaders of the clean economy. And today, I get to talk with one of those leaders. Al Subbloie is the CEO of the energy efficiency-as-a-service company, Budderfly. It's based in Shelton, Connecticut, has 125 employees, operates in 49 states, and has a growth rate this year of well over 50%. By the way, this is the third company that Al has built, and that's why I know you'll find this episode rich in lessons on how to build and run dynamic companies. Al, welcome to the show.
Thanks, Mike. Appreciate being part of it.
Al Subbloie: Business background and career path
Let me start with your background. How would you summarize your career as a company leader?
I started my first company when I was 24. I figured I had nothing to lose at that age. And, you know, in terms of both money and just taking risks. This is my third company. I tend to do them for a long period of time. So I also figured, Mike, at that time, it was hard to get someone to make me a CEO. So I figured if I start a company, I can immediately become a CEO. So that was one way to get the job done. And yeah, it certainly the first bunch of years, trust me, I have a lot of scars on my back from the lessons that I learned, you know, but I've been a company builder. I tend to start them, I think of the ideas, but then I run for a very long period of time and grow them to high scale and fairly sizable outcomes and I really love it.
If you look back at your upbringing, were there things that set you up for this career path?
You know, it's a question I ponder a lot because I don't wanna stop. I just so much passionate about building businesses. I always ask myself the question why. My father was a fine carpenter, just a builder of things. And I could remember even at the age of seven or eight building my first go-kart from scratch as an example or building forts. I just loved building rockets. I was big into Estes at the time and loved building things. I remember my first job is with Anderson Consulting, and I can also recall hating the way some of the business processes, and drivers, and decision making were done in large companies, really bothered me how inefficient it was. So I really had a passion to wanna change that and just do things that were better. And I think about it all the time and have started businesses in those categories.
So I really believe that both the upbringing and my early childhood, probably through my teens, through school and then even after in my first job, they probably all helped support that. Throughout my entire life. I've also played sports, so you'll hear me reference team orientation a lot, love the team here at Budderfly, it's probably the biggest success we have, but athletics have done an awful lot in my life, I think to drive at least style and leadership qualities that I like to at least bring to the business, marketplace.
Go back in time to the first time you were somebody's boss. I'm gonna put a camera on that. And what mistakes would we see you making? And then what were the big lessons you carried forward into the years that followed?
Great question. I'm gonna answer it. I think maybe differently. I think the first biggest mistake is maybe being a boss. I know that sounds a bit awkward. There are two styles that I've seen in leaders. One is the heavy boss style and one is the leader style, almost like a coach of a team. And I'll give those examples very often because in sports there's a fine line between the two. You can't run a complete democracy. Capitalism doesn't quite support that. So the notion of I'm not as good a boss as I am a leader. I'll be candid with you on that. I also believe there's a place in time for those qualities. I'm a huge company grower. I love to grow. I'm a big believer in building a number one player in any market.
If you're gonna play, you play to win and you play to become number one, it takes leadership to do that. And in growth companies, it takes vision, communication, motivation. They’re all the qualities you would see in a winning sports team. Obviously, it also takes discipline, takes good managerial skills. And I'll be candid with you, it's not one of my biggest strengths - being a boss. I'm a better leader than a boss. And hopefully you understand the difference as I articulate it between those two. But obviously in my early years I was becoming a very good boss also takes a lot of experience and experience comes over time. So in my first company I wasn't quite as good at it. In my second, I got better. I'd like to think on my third I'm doing even better. But like everybody else in the world, I have a tremendous amount to learn every single day. But very different qualities of being a leader than just being a boss. And I hope I was able to articulate that well enough for you and others.
The roles of clean economy CEOs
So just, let's say you're gonna go give a lecture at a local college. Summarize a difference between the two, a leader versus a boss.
I would say a boss manages tasks, manages specific outcomes. A leader drives vision, motivates large groups of people toward common goal. The thing, Mike, that I love about the energy space, it adds an element and a dimension in business that frankly doesn't exist in other markets. And that is simply. We can also save the world. I mean, who gets to save the world in life in capitalism? So what I've essentially done with Budderfly, I've aligned capitalism almost perfectly with saving the world. And that vision is something that at least at Budderfly, we try to articulate on a daily, weekly, and a monthly basis with all the troops. That's very different than managing a specific task on a day-to-day basis.
Mike Casey:Now you have run three companies, including the current one. What's the difference if there are any, in running a clean economy company versus a company in a more mature sector? And if there are differences, what are the ones that have jumped out at you?
Huge differences. Some of that is me, where I pick to play. I've learned lessons myself on where to play. One piece of advice I'd give to a lot of young CEOs is you have the choice to pick what you wanna do. Ironically for me of the three companies, I've never done the same thing. I go to different markets. I will say that the energy space and the reason that I picked it is my last companies were typical capitalistic growth outcomes, where profit is the goal. And listen, you try to create a vision of change, but you're really talking about that vision of change within a capitalistic set of guidelines or guardrails. When it comes to energy, at least today in the last five to 10 years, we do two things. We build a company with a great capitalistic outcome but if you create your model properly, the way we did with Budderfly, in an almost parallel sense, we end up with saving the world at the same pace we build the company. And when I created the unique model at Budderfly, I very specifically had that in mind. And it is much easier to lead a group of people, especially in today's world, where we have a common vision where we could do both. We could, because you listen, you need capital to save the world. So all I really did is I tried to align it to make capital the weapon to essentially conquer this major problem that we're facing, which is a massive reduction in carbon footprint. You mentioned in the beginning reducing energy is probably more boring than renewables, but honestly it's better to go to zero than it is to spend money to try to create at least a carbon reduction on something you don't even need to use. So honestly, we picked an area that has a huge impact, and I'm able to lead this business with really two primary drivers. We save the world and we build a great company for our investors, our shareholders, and our employees.
A brief history of Budderfly Energy Systems
Al, I'm really interested in asking you this, wasn't on the question list, but can you tell us about how you came to design Budderfly?
I chuckled because I enjoyed that little journey. Yes, I started out by understanding some common problems that are obvious to me. Electrons run two meters. They set outside buildings and they get used inside the building. And it really bothered me that we’re trying to save energy, yet no one measures the use of the energy in the place that it gets used. And they measure it in this one spot in an aggregate form. And I have a lot of metrics-oriented goals in life and I said, well, wait a minute. We need to be able to measure it in the right place before we can figure out a way to understand where we're using it so that we can fix it. So I started out by building a whole bunch of very sophisticated IoT devices and software thinking - we were gonna measure this and then go sell it like everybody else does in the world.
And what really happened is I started to go out there and sell it within literally two-three months, I think I did 30 customer meetings in like 90 days, I realized that was foolish. That just wouldn't work. And let me tell you why. It's pretty simple. In the energy space, there are about 45 different things you can do. And most of those things are completely unrelated to each other. And it ranges from renewables, as you mentioned to something as simple as putting a new HVAC unit on your roof or LED lights, et cetera. And some are commodities, some are sophisticated. And the problem you have is for companies to do 45 things. Each one requires someone to write a check. And then the only source document you have to measure all this is the utility bill. You know, it's probably the worst design document made by people kind.
And when you add those together, you create massive friction. Think about it. I gotta do 45 things. I'm not even in the business of managing energy. Most companies I've gotta pay money for each and every one of them. I can't even measure the ROI in the backend of it. So that drove me crazy. So I said, wait a minute, I got an idea. Why don't we just outsource the whole thing? I'll take it over. I'll hand them the outcome cause that's all they really want. And let me worry about all that complexity, including writing all the checks to do all of it. I'll get rid of all the friction. The customer just has to say yes, including actually billing it. So we're the company that decided to just take on the entire problem, make it really easy for the customer, and that puts us in the business of doing many different things. But our customers love it. And we're obviously going great guns here, building a great company. So that was the idea. And carbon comes right down, we manage it, we pay for it, you know, we're investing in that carbon reduction and we're also able to make money for the customer and ourselves while we're reducing carbon and saving the world.
Characteristics of a growth-oriented CEO
A great summary. Thank you for that. All right, so you're gonna take a hiatus from the business and teach a business course to MBA students. And your intro lecture is the role of the CEO, the effective CEO does these things primarily, what's on the list.
So again you're speaking right now to the growth-oriented CEO. And I'm gonna be candid with you if a company is gonna go into shrink mode, I'm the wrong CEO for that business. I've learned that over the years and I'm a really good growth CEO. I love growing, I'm passionate about it. So I will always answer that question and I'm qualifying my answer for you because that does not mean there are not other talented CEOs that are better at managing for profit, for let's say shrink for profit. That's just not me. I've learned that. So leader first as CEO, set vision, very heavy communication skills for all constituents, including boards, employees, customers, marketplaces, industry analysts. And the list goes on, need to be able to articulate very quickly what it is you're doing, what the objectives are, and frankly, even some of the bad news. You gotta be good at delivering that.
So leader first has the skill of a CEO individual executor. Second, but good picker of people around them that are very good at the different qualities you need to execute on a day-to-day basis. So define the vision, repeat it. Obviously steer the ship because very often you could have a vision to start and you realize you run into a brick wall and you've gotta have the courage and ability to be able to shift it and then move the troops towards that goal very quickly. Time always matters, because time is money and an ability also to raise capital becomes crucial. And ability to raise capital is the same quality. Articulate it well to an investor base, give them the confidence that they're investing in a successful set of people. Because most investors invest in people. Ideas come from good people. So that would be the way I would teach that class. I'm not sure I have the ability to take a break for that many months to actually do that. But if I were, that would be what I would preach.
3 qualities young CEOs should focus on
Okay. Related follow-up, speak to a mastermind group of young CEOs, younger versions of yourself. What are the three most important things you would tell them?
I'm a big believer in communication. I can remember when I was 24 and I started my first company. I think I had done one or two standups in college and I had the same fear of doing that as anyone would. And even if you don't have fear, are you good at it? I would recommend getting as good at that as you can, be good on your feet, be good on your ability to articulate your vision, challenges to groups of people. Those groups of people could be customers, they can be employees, they can again be investors, et cetera. You know, I've done a couple of IPOs in my life, and believe me, you do that over and over again and sometimes you don't have time to prepare, so you have to be really good at it.
Number two, you're driving the business to a goal. You've gotta pick those goals. Those goals I will start out to say you should aim for a macro impact, a market that has good macro dynamics. I find right now the energy market has awesome macro dynamics and that leads to the ability to grow your business cause it's really hard to steer macro events, those macro events that exist. Pick a business model and put your business into those macro events because that fast-running river will help move your business along very quickly. And again, it's hard to buy and change macro events, very-very difficult. The third is to surround yourself with great people. And great people come in different flavors. They come in flavors of good skills and experience, but they also come in what I call cultural alignment. You know, they share the same values, they value the business and life in general in a way that when you come to crossroads of decision makings, of decision making as a group, you're able to make those decisions efficiently. You don't create a lot of squabbling or too much conflict in your business. Cause that just doesn't bode well, obviously. Just like it would not in a sports team who's trying to win a championship. And you see that common thread in athletics, which is why I brought that up earlier. Those would be the three areas of advice that I would provide.
How a company’s cultural dynamics affect hiring decisions
So that leads very nicely to a drill-down on hiring. It's often cited as one of the most challenging parts of leading companies. And I'll tell you in this interview series, I hear consistent agreement that that's the most challenging part of the job. What takeaways have you built up over the years when it comes to recruiting the right people and bringing them on board?
You need to be aware of your cultural dynamics. Let's start out with that. Good leaders create cultural dynamics. You could probably tell Mike, and at least for me and the team here, the notion of team orientation. It is a very-very big cultural dynamic here at Budderfly and frankly in my last bunch of companies That does create degrees of loyalty, which then drives to a common purpose. Common purpose is important. And by the way, that can change. So when you hire, you've gotta decide, you hire skills and experience? The answer ‘Of course’. And you can drive that through understanding backgrounds of people, but you also have to drive common values, purpose and vision. And that's never easy to pull out. I find that having multiple interview experiences helps drive to that. And by the way, the way I look at that philosophically is anybody joining Budderfly, any company is joining a team and that's a bilateral decision. It's as important for us to make a decision on someone as it is for them. So that cultural fit becomes crucial. I try to remind people every day that cultural alignment along with skills and experience is incredibly important. Too many companies end up without that cultural alignment and groups of people when they're together and it gets quite big. And we're getting up there with 125 going to 200 people, getting everyone to kind of go for the common goal makes for a very efficient business, especially if you're growing at 50 to a hundred percent like we are. And if you don't have that, you watch how it impacts the growth of a company. So it’s never easy and we're in a market where it's hard to find people. So add that to the list. And if you're gonna be picky on those qualities that I just articulated, it makes it more difficult. But like everything else it takes hard work and you can do it. And trust me, people wanna join businesses with that philosophy. You could see that day in and day out because it's not easy to find out there.
I think I know the answer, you're gonna give to this question, but I like to ask it nonetheless. Occasionally, I had a reason to get to know several people who worked at General Electric during the Jack Welch era, and there were these stories that they would share. Some were passed down, some were directly experienced about, I guess for lack of a better term, what a jerky was. And his philosophy was make your numbers, I'm gonna pay you really well. If you don't like it, hit the bricks. If I don't like you, you're gonna hit the bricks and there’re 20 behind you because I pay really well. It's almost the opposite of servant leadership that I've heard about so much during this interview series. And I think my question for you is, from your observation of your peers, is there value in being that hard-nosed Jack Welch-style CEO?
I'm gonna say one thing, GE is not what GE was. I'm not gonna necessarily say I would completely attribute it to that, but let's face it, cultures don't change easily. They last for long periods of time. And Mike, one thing about me, I'm blunt about a lot of issues. I don't mind being that way. And listen, I'm less than perfect and made plenty of mistakes. I love the question. I'll try to answer it in the following way. I don't run a hundred billion company here or a 50 billion company. You know, I'm not even sure I want to. I don't, we're growing a company that started from nothing, right? That's working its way towards over a hundred million and 200 and I'd like to get it to two-three-four billion. I think that would be a great feat for everyone here in the business, the stage of that company.
And we're inventive, we're innovative, we're changing the market, we're saving the world, right? In ways that no one's ever done before. We're not really building jet engines per se where we've built the 10000 engine on the assembly lines, a little bit different. So I'm a big believer in startup companies moving to mid-level businesses that are highly innovative, that are changing all the time. I'm a big believer in more of the leadership quality at the top of the business. That said, you still have to execute. So when it comes to your operational metrics, we have more metrics here. If you looked at our board decks, they're incredibly long because I really force the business to understand its metrics very well so that we make smart decisions. Yeah, it's a little bit different than that hard-nosed of fire on the first and second mistake.
I'm not a big believer in that, Mike. I'm a believer in second chances, teach people how to be great. But that said, you make the same mistake three, four times over, you're gonna hurt the team. Yeah. It's not a good fit for the business. You have to move at that point. It's good for the person to leave the company and go in a place where they can be productive. I'm a big believer in that. So philosophically, I don't align with that hard-nosed at least in startup businesses that are growing at high rates the way we are right now.
Why firing will always be later than it should have
What is the guidance you would offer young CEOs on firing people?
Well, I will say that you will always take longer than you should have. Always.
I'm not sure I ever, maybe once I can remember where I said that was on time. Cause I think human nature, maybe, unless you're Jack Welch, I guess, and human nature would. They made that a little bit of their culture, right? And maybe for years that worked for them. It's never been something that I've done and been great at, especially in smaller businesses where everybody's toeing the line as a team. But I say that and I put it out there, because realize, you're always gonna wait too long. I will say that almost 80 to 90% of the time, your initial gut of what you should do will be what you do do. Especially if you're in an entrepreneurial business. What you believe initially is probably what's gonna happen.
So I ask you to be probably leaning forward a little bit. And when you do it, you don't have to look at it as being Machiavellian. You're doing the person a favor, alright? To ease it out more quickly and give them an opportunity to go to a team where they can be successful. More importantly, the majority of your employee base will be more productive if that person is not there. So look at it that way. You're building a team. If you've got a position that's not really doing a great job, you're really just not gonna win as many games and you're out there to win. And honestly, I've learned that my passion is the journey to win. The win is really the event. But the journey to win is probably the most rewarding for me. And honestly, it's moving people out as quickly as you realize. They're just not gonna be productive. That's important.
Is there an interview question you ask that you think helps you screen out the people you might have to fire at some point?
Other than the speeds and feeds of testing experience and skills and background, right? That I'm a big believer in doing it myself and having at least two or three other people do it. Cause in those flowing conversations a lot comes out and that's a bit of a speeds and feeds. But the question ‘What drives you and why do you wanna join our company?’ And let it go and let the conversation flow. The things you learn from that question and then it relates back to other experiences. What you're doing there is you're testing culture and cultural fit. Now you need to be aware of the culture of your own business to be able to align that effectively. And you take it from there. I find that to be pretty important. Culture's a hard one to select and I've made plenty of mistakes in that because again, it leads to good solid teamwork. And teamwork leads to successful outcomes. It's the way that I look at it as a leader of a fast growing business. Those things are important to me.
Important decisions and considerations for cleantech CEOs
I'm gonna end with two questions here. The first of those is, if you look back on the net success you've had, would you attribute that success more to what you and your team chose to do? Or what you and your team chose not to do?
I'm thinking through it, but it's a very good question. I'm gonna chalk it up to both. And it finds its way in so many different strategy choices. I'll try to give you an answer from history. I can remember in my first company, we did too much. It was a huge lesson that I learned, because it's easy, right? It's like eating. The food looks good, it tastes good, let me eat more. I can remember my first company, we did too much of that. I remember I got a lot more selective on focus in the second business and even more now. And I was very conscious when I chose the Budderfly model, which is, if you think about it, Mike, it's a very wide horizontal and deep vertical model. And I worried, I said ‘Are we tackling too much?’
And so far that's not the case, but I certainly was conscious about it. And your question is what I've learned, I will say that I'm incredibly conscious always as a leader, and I'll give that advice to other CEOs. Be very careful about when you decide to do something or whether that is too much and you should not do it. It’s never completely easy to thread that needle, but please be conscious of it. Again, my first company, it was easy to always say, keep doing more. And that can come in more markets, more regions, more geographies, more people. And you could really get a little reckless in the growth of your business. So I've had that happen to me before and have learned lessons. I've gotten better at making those judgment calls. So that's a good lesson. Hard to exactly tell everybody about those decisions other than be focused on them.
Al, if you look at the size of the problem that Budderfly is devoted to addressing and you look at the pace at which Budderfly and companies like it are making progress, are you left as a climate and cleantech optimist or climate and cleantech concerned?
So I'm generally an optimist, Mike, so it's hard for me to get out of that. And by the way, I'm an optimist because I like to do something about it too. So I don't just throw optimism at the wall. I will actually do something, in this case, build a company with almost zero friction to go after it. Let me tell you why I'm an optimist. If I run the math and I have run the math, I think we can pretty much solve this 30 to 40% takeout problem that you referenced in the beginning of this session. I'm gonna throw a number at it. 250 billion. And the best part about it, Mike, I can make that 250 billion worth more to solve the problem. You see what I just said?
In other words, I can make that 250 billion, make money to solve this problem. And I knew that, and that's why I built the Budderfly model. So, because I think the world is beginning to see that opportunity, we're certainly driving our part on it. I think money's fungible here for this problem. It's really not that much money in the scheme of things. I know it's a lot, but in the scheme of things, it's not. So I'm an incredible optimist. I think we've got a 10 to 15-year haul to get that done. But I believe it's doable. And we are, obviously, growing at a very fast rate and for us, it's execution along that to get there, because of that set of dynamics, why wouldn't we be able to get it done, especially if that 250 billion can make money to solve the problem.
Al, thank you for being on this show. I'll tell you, listening to you, I'm left feeling more optimistic about where we're going. I remember hearing Amory Lovins, the guy who founded the Rocky Mountain Institute. He went around the country, went around the economy, so to speak, for 20-25 years talking about just what you said, that we can waste less and make more money doing it. That waste is stupid. It's a sign of inefficiency in the economy. And I think he was so far ahead of his time and often so far ahead of the room he was in that it took him to do that work. So someone like you could come along and make energy efficiency the centerpiece that it should be in how we're gonna tackle this problem because it is for so long been the inglorious neighborhood to live in cleantech. You get all the attention going to wind and solar and EV fast charging but it's energy efficiency that's gonna get this done in a lot of ways. So to have the privilege of talking with you and hearing how you're building this business it's thrilling for me. And we appreciate the work you're doing and we really thank you for having you on the show.
Well, Mike, thank you. I enjoy the topic, passionate about it. And hopefully, this little content will help make the world a better place as well. It's all a set of building blocks to a common goal.
We have our way. We'll make sure that gets done, sir. Thank you so much for joining us.
Hey, our thanks to Budderfly CEO and President Al Subbloie for his time today. This is Scaling Clean. It's a production of Tigercomm. And I'm Mike Casey. Thanks for joining us. You can subscribe to our show free anywhere you get your podcasts. And while you're there, please leave us a rating and a review. We'd love to hear from you. Thanks for listening.