Inside Fuse Energy: Alan Chang on Building a $5B Energy Giant and Chasing £1B ARR

0:00This episode is sponsored by Deck Dolphin. Fundraising can be tough. You build a deck, you send it out and you hear nothing back. You don't get enough feedback. Deck Dolphin changes that. Get honest, actionable feedback from real VCs within 48 hours. Submit your deck today, go to deckdolphin.com and start booking more investor meetings with a better deck. Hello and welcome back to another episode of Riding Unicorns. Today we're joined by Alan Chang, founder and CEO of Fuse Energy. Alan first came on the show back in January 2023, when the business was very early in its journey, focused on building a full stack energy company.

0:38Fast forward to now, Fuse has raised lots of money, but recently a 70 million Series B, a 5 billion valuation. And Alan recently posted that the next big milestone was a billion of ARR, which is a great milestone to be heading towards. So Alan, thanks for joining us. Welcome back to the show. It's great to have you back on Rider Unicorns. I'd love to just sort of reflect a little bit on how the last three years have been. It's obviously been great success from the outside looking in, but what were you right about all along and what were some of the things that you've had to learn and adapt through those years?

1:14I think one thing that's stayed true from the beginning is our mission remains the same, right? To lower cost of energy, to increase energy per capita. So all this means true. So I'd say one thing that has changed a lot is how we get there. So I think we probably underestimate the complexity of the whole industry, right? There is a lot of moving parts. There are many things happening at the same time. It's truly a very, very complex system. And I don't think there's a single person that knows how everything works. So yeah, basically, I think the things we need to do to achieve the goal needs to be much more than we expected.

1:51So one of the key problems that we face every single day is basically working with the grid. The grid has huge timelines, so anywhere from 15 to 20 years of delay to connect to the grid. And it's just no way to run a business. It takes way too long. And actually, this problem persists not just for energy, but also in any industry that consumes energy. So where it's data centers or warehouses or space scrapers and whatnot. So yeah, so to truly solve this problem, you actually have to become the grid. And the only way you can become the grid is to buy your way in. So we're actually in the middle of buying our first grid.

2:27And we're starting very small. But the idea is we work our way up to a much larger grid. Tell us what that means to buy a grid. It's no different to buying any other company, except you're a regulated monopoly. I think the way to describe it is like, you know, you're basically buying a poorly run coffee shop, but there's a maybe a 10 block queue to your coffee shop. And if you can run your coffee shop, much better, much more efficient. You know, that's how you can increase revenue off your coffee shop and make a lot of people happy, right? And last time we spoke, Alan, we talked about some of the benefits of being an outsider to the industry because you obviously had a career at Revolut before starting Fuse and had a huge amount of success there.

3:06But in the last few years since we spoke, you have achieved hundreds of millions of revenue. You've raised a 5 billion valuation. Reflecting now on those pros and cons of being an outsider, what would you say about them? I wouldn't say the pros and cons. I don't think actually there's a lot of pros of being an outsider right however if i was insider i would have tried to do something about it much earlier but i think obviously there are a lot of cons being outsider right you know you have to learn something you have to do something you've never done before but i'll say like the key thing is you can assemble a very very good team that wouldn't have otherwise existed in the industry because like if you think about what top people care about right they care about you know having a lot of responsibilities they care about making impact they care about making uh you know working with other great people and obviously they care about the comp right which i'll say traditional energy companies don't really provide any of the above so i'll say we're in a very unique position where fuse can offer all four so i think that's really our only you know secret weapon i mean like for years octopus have been kind of known at least in the uk is the disruptor energy brand and i've heard they're scared of fuse they're worried like should they be worried and and why why haven't they innovated yet in the same way as you have well i'm not going to speak far of anyone specific in the industry i think regardless of what you're building as long as you're building you have our respect but one thing i would say is like if we thought the energy industry was in a good state we wouldn't start fuse in the first place like energy ultimately is like super complex domain and you know it depends on how much of that domain you want to engage right like for example you can't ignore you know 95 domain and get by and i'll argue that's actually what a lot of energy companies are doing so if you want to get to be truly truly great you have to go super deep and understand all the complexity and willing to actually go go super deep right and own the whole thing otherwise i don't think it's possible to to choose a mission i think that's really interesting because we interview a lot of founders on here and often they'll say things like oh if i knew how hard it was i wouldn't have ever started and actually alan it feels like you embrace that complexity yeah you're like one of the only founders i can think of that we've had over 200 plus interviews where you're like i wish i'd started earlier because now i've realized how hard it is what is it about incredibly hard complex challenges that really does attract you and what gives you that belief that you're the right person to solve it yeah so for me it's basically impact the problem i think goes well saying that this is one of the most important problems in the world right now.

5:43I think second is like this complexity sparked my intellectual curiosity. And when Charles and I discussed starting a company, one of the criteria is that we agreed it was, you know, it has to be a problem that if it weren't for us, it would be solved. These are things we care about. And it just so happens that energy takes all those three boxes. I think we're embracing complexity. And, you know, I think complexity will only go up from here. But I think what gets me very motivated is building a great team and attackers' problem because I think it's a bit counterintuitive, but the harder your problem, the more important the problem is.

6:15I think the better talent you can attract, right? And I'll say like we have, I'm pretty happy with the team. I go to battle with every day to solve this problem. What are some of the tangible achievements that you're most proud of in the journey of Fuse so far? It's very hard to pinpoint exactly one thing, but I can give you some numbers, right? So we have benchmark against our cost of energy. So not necessarily the price we pass on to customers, but our cost energy. We benchmark against the whole industry. And so far, we've lowered, you know, from beginning to end, which is today, we've lowered to about 15%.

6:48So some of that cost savings we decided to pass on to customers, but some we've decided to keep as margin. But that's like the efficiency gain we've made so far, 15%. And where's that coming from? Is it labor? Is it greed? It's a combination of many things. For example, it could be from automation, like something as simple as automation. So like, you know, last month we launched our AI customer support. So that gets us some cost savings. But it could also be our billing engine. It could be also from our production and demand forecasting, just having a more accurate and precise forecasting compared to everyone else that allows us to buy exactly how much we need, as opposed to overbuy or underbuy, which basically create an unintentional position where we can lose money in the market.

7:27Another example is our EPC team. So building utility-scale generation. We are able to save roughly 30 % in capital compared to everyone else. because of just better execution and just in-housing, building things in-housing, both outsourcing. So there are many, many levers we'll pull to achieve that 15%. And the more we do this, we're more realized, actually, there's so many more levers we can pull. But yeah, I'll say that's a key achievement, 15%. It's amazing. It is amazing. And I'm a happy customer. I've been a customer since we did the podcast, basically, because I think it was still a wait list when we first did it, and I was on the wait list.

8:01And then as soon as I could, I switched to Fuse and have been a very happy customer since. And I wanted to ask, what are some of the other levers that you've got planned? You know, you recently posted, you know, Next.1 billion ARR. And presumably some of these levers are part of getting you there. So what have you got coming next? Yeah, so probably the product I'm most excited about, you know, coming this year is a micro solar and battery product. So if you think about the problem of conventional solar, you need to own your own roof and you need maybe 10 to 20 grand of your own money to install it.

8:35So if you think about it, that's not very accessible to most households. So we're building a product where it will cost just over a thousand pounds. And it's going to be like roughly 2.5 kilowatt system of solar and battery. And all you need to do is plug it in. So it's going to be like IKEA style assembly. So it's like a 10 minute, roughly 10 minute assembly. And then you can start generating your own energy. So you can hang up, we'll give you a mount. You can mount it off your balcony or if you have a backyard, put it in your backyard. or if you're unfortunate you don't have neither of them you can just get the battery too and we're talking about three-year payback right of the system costs so you're getting money back in roughly three years and also it's going to be a very i'd say well-designed product right so i'll say traditional energy products are not the most beautiful don't like look great in your home so i think this is going to complement your home decor like super well and it's going to you know integrate seamlessly into your fuse that too.

9:30That's super exciting. It will get me to change. I have to say home batteries have been on my radar for a while. Alan, we love getting to know the people behind these companies as well. And one of the things that's talked about a lot in startup land is how the most successful founders balance these two things at once. They balance insane self-belief, but also a huge amount of self-doubt and a fear of not being enough, a fear of not achieving enough. does that resonate with you? Yeah, of course. I think for me, my fear of not moving fast enough probably drives me more than, say, positive reinforcement.

10:11So yeah, for sure, that does resonate. Why the drive to move so fast? Why is that the thing? Because time is the most important commodity. Actually, if you think about it, I think the biggest enemy for us is time. It's actually not capital, it's time. if we don't use that time efficiently, like I think we're not going to succeed. And are you always looking forwards or do you ever give yourself credit for what you have achieved? No. I don't think what we achieve is, you know, I'll say it's a small achievement. Yeah, I'll just call it a small achievement and yeah, there's so much more we can achieve and yeah, I rarely look back.

10:51Does that, tell us about the mindset. So does that mean, do you feel like contented and satisfied satisfied by what you were doing i'm not satisfied but i'm definitely not miserable i'm having fun having lots of fun but not satisfied and alan obviously revolute is a bit of a talent machine there's been a lot of revoluters that have gone on to launch businesses and you mentioned there that like relentlessness to sort of move so quickly and revolute had that culture and we're not going to get into a whole culture thing but was that like learned at Revolut was you know did Nick ever stand up and say this is how you should be you know you should literally care more about the time than anything else or is it just inherent yeah I can't I can't speak to other people right I can speak for myself like uh like what drew me to Revolut and what kept me there for a very long time is the fact that this was the environment and to be honest, I think for me, I've always kind of been like that.

11:55So it was kind of the perfect environment for me. But I would say the key thing for me was the fact that this environment has succeeded gave me the confidence and reassurance that actually this is the right way to build a company. That was my key learning. Without the Revell experience, I would probably doubt myself a lot more. Yeah. You said you're very forward-looking. like can you picture yourself and fuse in five to ten years yeah so well a difference between five to ten would be very big hopefully but let's pick ten right so hopefully we're about with their largest energy company maybe of a continent maybe not of the world yet but on the continent we would have meaningfully lowered energy costs by 20 30 percent maybe and whether you're household or a business, you can definitely feel that cost saving.

12:50Because ultimately energy is a bounding constraint for a lot of downstream industries. If you think about like AI, probably the most obvious example, but also like chemicals, artificial fertilizers. So a lot of these downstream industries that heavily depend on energy, I hope at least some of that constraint is removed. And I think lowering carbon emissions comes for free if those first two things are achieved. very cool i'm obviously a consumer but what percentage of your revenue is b2b how many businesses do you guys service as well right right now close to zero really like reality is you know we love to do businesses it's just we have so pretty small team we try to build that team but yeah like i love to do it faster it's even the local pub they're under pressure at the moment with minimum wage going on, national insurance contribution, and they're all closing.

13:51Yeah, whether it's a local club to, you know, there's still a steel factory, right? We'd love to lower your energy costs. And Alan, how will you guys avoid being disrupted yourselves? I think the only way to stay ahead is to keep pushing forward. I think startups is like a shock. If you don't move forward, you die. I think we just have to keep moving. We just have forever to move forward. So will you have a research lab? Would you acquire companies? We will build those research teams. The idea is that we start, you know, simple technology. So that's why we're very focused on solar storage. We're not taking any technical risk, but we will build research teams.

14:38We want to create an environment where the best nuclear researchers, nuclear engineers want to work in, right? Yeah. And you said earlier that the limiter isn't capital. It is often talent and speed. What are the hardest roles for you to hire for today? It's engineering. The best engineers are high in demand. And I would say like a lot of top engineers still haven't heard about us. I think it's really like top, top engineers and actually designers too yeah so for example like we the micro solid battery products it's gonna look beautiful in your home so not only has super high utility like we believe every product you know probably needs to be uh i know i know i mentioned this like last time right the you know the person i want to have lunch with is you know enzo right enzo ferrari i really believe i believe this like principle of like the things we build needs to be not only useful but beautiful and this product we're building will be beautiful to look at in your home right it's not going to be an eyesore and you know if we if we design ugly product even if it's super functional i don't think people want it yeah and so hiring is the the challenge like how do you get around that like how do you attract the best people yeah so yeah so right now for every engineer or designer know i still do the you know final interview and i explain to them this is what we're going to do i also explain to them this is going to be like very intense it's going to be tough you know do what you will that information and i'll say majority people get very excited and you know they go from you know oh this is just another job interview to oh actually this is super exciting this could be my life's work and when when you're telling them how tough it's going to be what are you actually saying are you saying like you're going to be here you're going to be sleeping in the office you're going to be working weekends or like are there some anecdotes that you share with them well like i don't i i don't think sleeping in the office is strictly necessary i'm not going to stop you from sleeping in the office if you want to but you know it is not encouraged right but like there there is going to be a lot of work ultimately to build a full second energy company another way of saying is like you're building 50 companies in one.

17:00But if you're building 50 companies in one and you have a team size of maybe 1.5 or two companies, then by definition there's going to be more work on a per individual basis. I think it's that. It's for the individual. I think this is a great environment for the individual that has high agency, wants impact, wants ownership, and wants to make a difference. yeah and like what what are the signals in interviews that signal to you that an employee is going to be an amazing employee or can you only find that out later yeah so i think i think uh obviously like the first thing to do is like whether they have the skills right to do the job so you know if you're a designer you know you have design skills or visual skills as well as like ux skills for engineer you have you know programming problem solving etc.

17:54But if you think about traditional soft skills, right, or the attitude of people, it's actually quite simple, right? When you explain to them, just like I did, like this is all the things we're going to do, these are all the markets we're going to go, these are products we're going to build, blah, blah, blah. And do they get excited? Do they lean in? Right? Or do they lean out? And you can tell them body language. If they say things like Like, oh, it depends on compensation. Oh, it depends on blah, depends on, you know, probably not the right fit. And has that been a reliable signal for you? Yeah.

18:31Like, actually, it's actually simple enough. They just self-select out, which I, you know, totally respect that, right? You know, there's, I don't think Fuse is for everyone, right? And if you don't join, you can still be, like, a very talented engineer or a talented designer, and it's not right for you, right? And that's totally okay. But yeah, I think it's more about very transparently explaining, this is what it's going to be. There are no surprises. If you like this, if this is your thing, please join. Love that. What do you feel more strongly now than you did when you last came on the show?

19:08I think my conviction that this problem could be solved is higher than before. Although the complexity, my estimation of complexity went up, but what I know about the problem also went up and I'm more and more convinced this can be solved so is this the next 100 billion dollar company Alan is this the next trillion dollar company well I think I think if we're successful I think this could be a lot more than that time to get in now yeah it was probably time to get in when we first yeah yeah for anyone listening only tandy we've got amazing candidates listening so they should all yeah no it's great well alan thank you for um sharing all of that we've still got our final two questions but just sort of reflecting on the conversation what you guys did at revolute is obviously exceptional to go again in a completely new market and do what you've done so far it might only seem like a small achievement because you've still got such a you know important mission to deliver on.

20:11But I think what you're doing is great and a very happy customer. And obviously, if you achieve what you think you will, then it will be a huge success for yourself and for Europe and for everyone involved. And it will be their life's work. So it's great to hear. Our final question is our dinner party guest game. So you hinted earlier that you'd remembered the three that you came up with last time. so I've got them here in front of me but you probably remember them but if you were to have dinner with any three people now who would they be? I'll probably still pick one of those three to ask Ask Jobs and Enzo Ferrari still getting strong with them thank you so much for coming on Riding Unicorns again obviously it's been great to have you back and we love seeing the people that come on the show just go from strength to strength we can take absolutely zero credit for what you've achieved obviously but we just wish you continued success as you take on very important problem for consumers businesses and the world mankind exactly so thanks again for coming on and sharing more about how it's all gone thanks for having me thanks alan that's it for this week thanks very much for listening to stay up to date with the latest episodes please follow or subscribe on your favorite podcast platform we also have a newsletter called reading unicorns which is another great way to get every episode direct to your inbox please tell your friends about it and engage with us on social media and we'll see you on the next episode this episode is sponsored by deck dolphin fundraising can be tough you build a deck you send it out and you hear nothing back you don't get enough feedback Deck Dolphin changes that.

22:01Get honest, actionable feedback from real VCs within 48 hours. Submit your deck today, go to deckdolphin.com and start booking more investor meetings with a better deck.