Alan Chang, Co-Founder and CEO @ Fuse Energy

0:00Alan Chang:Alan, thank you so much for joining us. It is an absolute pleasure to have you. Before we kick off, for our viewers at home who may not know about your fuse energy, give us a super quick one-minute pitch. Who are you? What are you building? Sure. So we're basically building a modern energy major from utility-scale power generation to electrical chemicals, all the way to energy retail and everything in between. amazing and why did you choose um to go into energy this field this industry what about it inspired you yeah so i think the way i think about it right is like you know i just asked myself like what are the next uh most important problems in the next 25 years right and in my mind it's uh energy and ai right um so like obviously like energy is actually they're also closely linked right um so you know ai actually consumes a ton of energy right um there's you know numerous forecasts right um that expect ai to you know more than double the current energy demand right um so obviously we need to and and ai actually drives energy prices up right so we need to find a way to you know a lower cost of energy right and b make energy more abundant right so i looked around and i couldn't find you know any energy copies that i think is doing a good job um so i decided that you know uh we'll give a crack amazing build it yourself if you can't find one um why did you decide to go a full stack right so fuse is both responsible for generating some of its own energy and also doing this sort of like trading and supplying why did you choose to kind of own the sort of the whole chain of this?

1:47Yeah, so ultimately energy is an extremely fragmented value chain, right? There is like before energy gets to your home or to your business, to the factory, it actually, you know, goes through many, many steps in many companies. So when we looked at everything, so we just follow the steps, right, from before a power plant is built all the way to power delivered to your home or to the business. We just found like every single step of the way, there's just so many inefficiencies and therefore costs, right? So really the only way to structurally solve this problem is full iteration. There's just no better way to solve it.

2:32Alan Chang:And how are you finding it, managing or balancing both? you know, they're quite different businesses and quite different business models. How do you find balancing the sort of the generation and the sort of the more typical energy company work? Yeah. So actually, they complement each other very, very well. Right. So let me give you a practical example. Right. So power demand is generally lower, let's say, on the weekend. Right. Because people go out, have picnic and walk in the park, do stuff. Right. However, wind is still blowing, sun is still shining on the weekend, right? So, you know, you still get wind power, you still get solar power.

3:13So we see increasingly more and more often across the UK and also in Europe, power prices go negative, right, in the weekend, as in you get paid to consume more power. So effectively, let's say with a solar park, right, if we were only operating a solar park, we have no choice, right? but to eat that loss, right? Or we can decide to turn it off, right? And make zero revenue. But in practice, most solar power operators, they do not turn it off, they just let it be. Whereas for us, what we can do, because given we also have retail customers, all we can do is we can turn off our own solar site remotely and basically not only avoid that loss, but go very short, right?

4:05So our customers consume even more power. So we actually not only build a customer for power, but also make money on the short, right? So we basically make money twice, right? So this is something it's not possible to do unless you actually own both sides, right? How does the economics balance between sort of the full stack? because it sounds like sometimes you might be making money more on the trading, sometimes on something else. How does that work today and in the long run? Yeah, so today, maybe we can explain the numbers, right? Today, we already have eight times better margins than our competitors, whilst an average customer can typically save 200 pounds a year or more with us.

4:59right so we already you know we gave a lot of margin away in terms of savings plus we make eight times better margin right and and this is this is just what we've done in the last two years since we we we launched a product um is the driver is the driver of that profitability the fact that you're full stack or sort of the software element that you're able to turn things on and off remotely or what what what drives that that other energy companies couldn't do yeah so we can go step by step, right? So let's start with generation. So typically how a, let's say, how a power plant gets built is there are usually three companies involved, right?

5:40There is a developer that gets the land, the grid connection, and the permitting required to build a site. And then they typically they would sell that project to a, it could be a private equity fund focusing on power, or it could be an energy company. Once they buy the site, usually the owners of the new project, they don't have any engineering in-house. So they'll appoint a company called EPC. It stands for Engineering Procurement Construction Companies. That basically do this engineering procurement construction work. Now, these EPC companies, they typically buy, because their demand is very lumpy, because they don't always have projects, they typically buy components from wholesalers, which obviously mark up the components, the raw component costs.

6:34They also don't have exactly all the engineering in-house, because there may not be enough work for them to sustain a full-time engineering team. And they also might also have some of the construction. right and because another problem is because there's a separate company that the developers that submitted the planning and the initial engineering design they basically have to work with the constraints right of what was submitted right in the plan in the planning right because no one wants to do planning again right um so as a result of all this like there's you know three companies all of them need to make their money plus all these inefficiencies i just described it becomes very expensive to build these sites.

7:21Whereas what we do is we do all of that in-house. So everything in the described, we build it under one umbrella or under one company. So we actually just finished our first solo site. And we successfully built it about 30 % less CapEx per megawatt peak than what the market can build.

7:44Alan Chang:That's amazing. Yeah, it's amazing. But it also sounds like so much complexity. That's, yeah, it's no easy feat. What's like the biggest headache to you in getting that all in-house? Yeah, so we, I mean, it's about assembling the best engineering team, right? So our projects team, projects engineering team, a lot of them came from big engineering companies like SpaceX Tesla etc or Boeing and yeah we basically my brief to them is like you need to become the build anything team so we're starting very simple technology such as solar which is easier to manage easier to build but eventually we want to go up the complexity scale and start building nuclear as well and all of this in europe of course and this is yeah great well we also have a team in the u.s but i'll say predominantly the team is european based today super interesting what's that team in the u.s for is that are you looking to expand there um so yeah for us like we we just hire where the time is right so like we take you know obviously there's some constraints within time zones um so if you're too east in asia it probably doesn't make sense yeah but otherwise like we we we hire whether you know engineering are right it's like we we're in no second where we hire amazing i wanted to touch on some of your customer numbers because there were some bits released i think you raised money earlier on in the summer and part of that there were some numbers released around uh hitting 50 000 customers growing revenue i think 7x over two years then you got to like 90 million of kind of like annual revenue ARR where is this growth come from how are you acquiring your early customers yeah so I mean to be honest like we we haven't really done a lot of marketing um first two years we've basically been really focusing on product and the ability to scale uh we actually exceeded those numbers already so we more than doubled since we released those numbers um but yes ultimately like I'll say you know cut like what I know will forever be true is customers love lower costs.

10:01Customers love good product. Customers love good customer support, right? We're the only energy company in the market today that offers 24-7 support. Like truly 24-7, 365 days, including New Year's Eve. Like no one else does this.

10:21Alan Chang:Amazing. Yeah, my dad actually signed up like two weeks ago. I was telling him about this and she being the diary and it was a word of mouth. I think he got it recommended by a friend. And it sounds like that's how it's been spreading at the moment, which I guess is like the dream in the early days, right? To have your customers be your biggest. Yeah, for sure. For sure. When you say customers, is it 100 % consumer or is it a mix with commercial? Yeah. So we have, I'll say predominantly it is residential today, but we also have some commercial customers. wow it's even even more impressive to do that on the retail side you know where where people are a little bit more cumbersome to acquire um so it's super exciting probably turning on commercial will be will be easier right yeah so the idea is like we uh like what the reason why we try is uh we start with consumer first is because ultimately the cost of acquisition for businesses are much higher.

11:25However, we want to use that consumer business as a way to build a brand, right? So, by the time we properly launch a business offering, there's already a well-established brand and, you know, therefore reduce the cost of acquisition.

11:41Alan Chang:Amazing. A lot of the messaging that I've seen is about being customer obsessed and, you know, very customer focused, which is quite unusual for an energy company. It's not something that you associate with energy companies generally. Has that been shaped by your experiences at Revolut? Yeah, for sure. I mean, I think this is just, this is the optimum way to operate any consumer company, right? It doesn't matter what industry you're in, right? So I personally review every single negative review that we have, right? Every single complaint. And we, you know, discuss within the engineering team, right?

12:18How we can improve, right? both design and engine team, how we can improve. And we always, we make, we ship like, you know, over 10 releases a day to make the product better. Right. So yeah. And typically we're not perfect yet, but like we are, yeah, our rate of development is yeah, probably the fastest in the whole industry. That's super exciting. I mean, I wanted to ask a couple more questions about Revolut because it's so, uh rare to talk to someone who is so so early at a company like that and stayed for such a long time kind of through the through the cycles um what was it like during joining a company that early and then seeing it grow all the way through pretty much yeah i mean yeah i would say like the the problems you face in your early stage versus late stage is very very different um like like overall it's uh you know like when you're a small company like it's chaos everywhere right like you have many fires so you have to choose which fire you have to put out first and which fire you have to let it burn um but when you're a big company right it's um there's no chaos anymore and actually you're trying to you know create a little more chaos by pushing do more pushing the frontier um so i'll say it's it's it's a bit different in how how you skip how you grow um yeah yeah and when when you like started or joined revolute when was the moment where you kind of realized oh this is going to be something special or you know we're catching lightning in a bottle yeah so yeah to be honest like when i joined revelry right um my first impression of so i i remember so let me tell you a story how i joined revelry right so i i just graduated fresh out of college and um i was just looking for a job right i you know applied the usual big tech you know big companies i was looking at startups right and i applied to a lot of startups but there's only one startup right so it was basically maybe one week in the search right and there's only one startup that replied within five minutes of me applying it was Nikolai Nikolai replied within five minutes of me reaching out I was like wow this is so fast and then he asked me for come to a face-to-face interview in the office like the next day I was like oh my god this is so fast and then uh and then i met him right uh and then uh he asked me some like problem solving questions which was pretty hard i was like wow this guy is uh serious right um and then he made me an offer on the call right after the interview right the same day um it's funny because you you you i mean the first word that comes to mind is sort of urgency um and i think that's like what you've written on your uh goal or or sort of your mantra for building the energy company as well yeah for sure for sure anyway so he i was like okay i need to think about it like this is too fast i need to think about it um and then i slept for one night and then i said yes the next day amazing i and then he asked me can i can i start uh on friday I said no because I was moving house, but I started on Monday, right, immediately after.

15:51So that's the story of how I joined Revolut.

15:53Alan Chang:That's insane. Can I ask quickly, have you adopted those tactics when you've been hiring, when you started making ready hires, when you're thinking, all right, you know, that worked for me. This is what I'm going to do now to get the top talent. I'm going to move lightning speed. For sure, for sure. Like we, yeah, we typically offer the same day or next day. but yeah like we we move very fast and like a lot of candidates actually tell us it's too fast give me some time to think about it um but yeah like we we like we yeah we waste no time right ultimately i think the way you win is you know executing better than everyone else executing faster than everyone else um and i think it's like as simple as that right there's no magic bullet, right, of what makes the company successful.

16:47I think it's just, yeah, quality execution.

16:52Alan Chang:Amazing. That's an amazing story. Yeah, I'm kind of not surprised by how quickly that Nick from Revolut moves, it kind of aligns with everything else that I've heard. But Alan, I'm sort of kind of out of time now. But thank you so much for joining. We absolutely love chatting. I'd love to get you back on the show at another point. It seems like you are on an absolute rocket ship trajectory and that fuse is doing amazingly well um so thank you so much for joining us and let's stay in touch thanks a lot for joining thanks