Interview conducted by: Lynn Fosse, Senior Editor, CEOCFO Magazine, Published – June 8, 2015
CEOCFO: Dr. Hood, would you tell us the concept behind Verdafero?
Dr. Hood: We are a software and consulting company based in San Francisco. Our main focus is providing a SaaS platform for end users and channel partners like consultants and third-party service providers to help their customers save money on reducing, not just energy, but water, waste, heating fuel, transportation fuel or any utility that a facility might have.
CEOCFO: Is it a bit unusual to handle all of the various utilities?
Dr. Hood: It is and that is where we focus. The primary reason being that our customers all have electric and gas, but they also usually have water and waste expenses. These are all costs that a business has to pay on a monthly basis. For many of our customers, energy is not the largest expense. As an example, for some multi-family property management companies in San Francisco their largest expense is usually trash. We therefore try to give the customer a holistic view of their utility usage and expense to help them reduce the operating expenses of the business, increase net operating income and increase the value of the business through utility savings.
CEOCFO: Do you find that as you are offering all the different utilities, companies tend to pay attention where they may not have otherwise?
Dr. Hood: Absolutely. We find that many businesses that have several facilities may just get one utility bill that covers ten properties and they will look through it and say yes it is roughly the same as it was last month, sign it and then give it to the accounting department and they write the check. Whenever we start to analyze and normalize it in a way that makes sense for the customer, they now can look at it on a dashboard view to be able to see each property individually. They tend to pay more attention now that they can see individual properties, how they compare to each other, how much they are using and how much they are spending. They can now make good informed decisions. Essentially, we make sense of the data for them.
CEOCFO: How far along are you able to help companies that are using your service?
Dr. Hood: From the insights from the data that we get, we can be very helpful. At the end of the day, the person that knows the property best is usually the building owner or the facility manager. There are many energy efficiency startups and large companies trying to pinpoint problems automatically. The problem with this approach is that you are still going to need an engineer to confirm the problem or whether it is something else. At Verdafero we go to a level that the data allows. We do not install hardware or mount sensors onto every individual component within a building. We take the billing information and boil it down for the customer. As an example, even from the monthly billing or daily data we receive, knowing some characteristics of the building, we can usually pin it down to a faulty pump, HVAC or lighting system but our real value-add is that we present the information to the user who knows the building the best and who is best equipped to know what the really problem is.
CEOCFO: Do the organizations that you work with have to allow you access to their records?
Dr. Hood: With their permission we connect to the utility to automatically download the site, electric and gas data and sometimes water. They can also send us their billing data and we can enter it for them or they can easily enter the data themselves whenever new bills come in. We try to help the customer as much as possible to make it easy to enter the data so we can do the analysis and present it. The software is available 24/7.
CEOCFO: What types of organizations tend to use your service and what groups could benefit?
Dr. Hood: I would say that every commercial building could benefit. Market types that really appreciate the service we provide are income properties like a hotel. We have a large number of hotels across the US that are using our system. Hotel Real Estate Investment Trusts (REITs) are another good example of a market that wants to use the Verdafero system to be able to look at all their hotels in one place and compare, normalize and make good financial decisions based on good data. Franchises that have a number of properties, gas stations, banks, credit unions, health resorts, health clubs; are all big users of energy and water and can also take advantage of our service.
CEOCFO: You work with partners as well as direct. How does that break up and how would you like to see it?
Dr. Hood: At the moment it is probably 30/70 for partners / end user sales. We want to flip this as quickly as possible because channel sales are critical for our kind of business. As an example, we sell through consultants or 3rd party service providers like electrical, plumbing and heating contractors, as we do in the UK. The channel partner may already have 100 customers. We sell through the channel and they can sell it their 100 customers. The channel partner is now able to get visibility across their 100 customers. If there is a problem, they can step forward quickly and offer to help you fix their problem. That drives more business and helps sell more products and services for the channel partner. The end user may be a car dealership, health club or bank and are usually happy to pay a fee every month to the trusted service provider to look after this side of the business for them. It is kind of an insurance policy for end user, a business driver for the channel partner and for us it is now 100 additional subscriptions.
CEOCFO: How has the service improved over time?
Dr. Hood: It started from our consulting customers, whenever we did energy, water or full sustainability audit, they acknowledged that the service was great and that we saved them money. However, they would say, “What will we do when you disappear?” Inevitably, they would fall back to using spreadsheets and paper bills. So we developed the first module around electric because it is tangible and people understand that when they turn off the lights they save money. We quickly realized that energy was sometimes not the largest expense for many of our customers. It could also be water or waste. The addition of more utility modules has been of great value to our customers. Then as we progressed, we were able to take into account weather or occupancy variations. It has progressed over time where we can now take into account any variances that may affect the utility usage for the customer so they can now make informed decisions from good data.
CEOCFO: You recently announced your new commercial partnership program. How is it working for you?
Dr. Hood: The Commercial Partnership Program is working well. It adds value to everyone in the chain. It provides value to the end user as something less for them to worry about and they can get on with running their business. They know that a trusted expert is taking care of it for them. For the channel partner, they get insight into their customer and are now able to offer a full service offering as well as their traditional services and for Verdafero, we get more subscriptions.
CEOCFO: Do you know if many of your customers actually pay attention and make changes based on what learn?
Dr. Hood: The reporting functionality of our platform is key. It is the part that our customers rely on to notify them of any problems. As an example, couple of years ago we had a credit union customer here in the Bay Area. From the analysis, we were able to show that there was a 100% rise in one of their branches’ electricity bill over the course of a month. We alerted them to it and they tried to work out what the possible cause was. A couple months passed and it was still there, as they could not track down the cause of the spike in cost. After calling the utility to investigate they immediately found that it was a utility meter problem. It was an old meter with a stuck dial. They swapped it out and within a week handed the credit union back almost $15,000 in overcharged fees.
CEOCFO: Why pay attention to Verdafero?
Dr. Hood: Verdafero is a SaaS platform designed to help commercial customers actively manage ever-increasing utility expenses. Utility costs are often overlooked but can be a large business expense and getting larger. Verdafero’s key selling point is that we do not only look at energy but we look at all the utilities in a way that is cost effective and information rich and enables the user to make informed decisions to save money.