MONDAY, JUNE 28, 2010


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S WASHINGTON BUSINESS Saving electricity, making a profit use energy.”


FIRM MONITORS ENERGY USE


Va.’s Opower helps consumers cut costs


by Danielle Douglas Capital Business Staff Writer


Three years ago, Dan Yates


and Alex Laskey, the co-founders of Arlington-based Opower, came to a conclusion: People cared about their carbon foot- print, for the most part, but needed a blueprint for reducing it. The longtime friends recog- nized an opportunity to create that path by providing people with an analysis of their electric- ity consumption.


Since then, Opower has blos- somed into one of the rising stars of the energy industry, on track to post a $35 million profit this year, roughly eight times its revenue in 2008, according to the privately held company. “We’re starting to see stronger adoption of Opower’s product by a lot of operators,” said Teresa Mastrangelo, an analyst with re- searcher Smart Grid Trends. “It’s a very simple way to start edu- cating consumers on how they


Opower essentially takes raw


data, obtained from a utility company that contracts its ser- vices, and creates detailed re- ports on how customers’ con- sumption compares with their neighbors. The report also pro- vides customized tips for each customer to address wasteful be- havior. What’s more, the Opower team, made up of 105 employees, redesigns utility Web sites, of- fering e-mails and text alerts to update customers on usage. “We are very pleased thus far,”


said David Botkins, a spokesman for Richmond-based Dominion, which retained Opower earlier this year for a pilot program in Charlottesville. “We wanted to see how the product and the in- formation would be received, and so far it’s been very favor- able.”


Dominion is one of 35 utilities in 16 states that have signed up with the company, which now delivers reports to 2 million households. Yates and Laskey expect that the program will reach 4 million homes by the end of this year. “When you give people the


context to understand how they compare to their neighbors in similar-size homes, it’s a very powerful engagement mecha- nism and they will pay atten- tion,” said Laskey, noting that


the average customer receiving the reports is reducing con- sumption by roughly 2.5 per- cent. “Now 2.5 percent for one house is a small number, but 2.5 percent across the entire country — we’re talking about $5 million a year in savings for customers.” The effectiveness of Opower’s


strategy has not only won them more clients, but also the atten- tion of President Obama. In March, he paid the company a visit, praising it for “putting America on the path to a clean energy future.” To be sure, Opower is not the only player in the energy data- management space. Both Google and Microsoft launched soft- ware last year to track consump- tion. Mastrangelo said, however, that these products were a bit cumbersome. Google’s PowerM- eter, for instance, requires cus- tomers to purchase a monitoring device if they are not signed up with one of its four utility part- ners. “The Opower product ties into the bill that you are already get- ting from your utility,” Mastran- gelo said. “Customers can under- stand their energy consumption without requiring a smart grid structure to be deployed or hav- ing to put in a lot of devices in their homes.”


But David Leeds, an analyst at GTM Research, said the brand power behind Microsoft or Goo- gle could pose a threat to a smaller energy software com- pany. “A big part of it is getting utilities, which are risk-averse, to take on a company like Opow- er,” he said. “It’s a hard industry to crack for small players.” Still, Leeds is bullish on Opower’s model, calling it a smart way to help modify consumer con- sumption.


With all the buzz surrounding Opower, Mastrangelo said the company is a prime target for ac- quisition. But Laskey and Yates have no desire to be folded into anyone’s firm. “We’re not providing a part of the solution, which is typically when companies get bought,” Yates said. “We are providing a full solution that stands on its own. And we’re excited about the public company prospect.” Opower has raised two rounds of funding through venture cap- italists. San Francisco-based MHS Capital Partners floated the firm $1.5 million in seed money in 2007, and Baltimore’s New Enterprise Associates in- vested $14 million the following year. “We get calls from investors every day,” Laskey said. “But we have the luxury of being self- sustaining.”


douglasd@washpost.com Plenty of delicious fat in the ice cream, if not the profits


VALUE ADDED Thomas Heath


O


ne of the best things about shopping at Whole Foods is the free samples. I sometimes skip lunch


and fill my belly with free cheese, crackers, Italian bread dipped in olive oil, sliced nectarines, or any number of desserts, from bundt cake to super-fat ice cream. Which brings me to this week’s


subject. I don’t usually write about the same industry two weeks in a row, but I’ve decided to write about ice cream again. What better time to write about the frozen dessert than in 90-degree heat? Besides, July is National Ice Cream Month, designated by President Ronald Reagan in 1984. Last week we talked about two brothers from New Orleans who moved to Washington and opened up a chain of Haagen- Dazs stores. This week’s piece originated in


a corner of the Whole Foods on River Road where I shop. It was there I found Susan Soorenko offering samples of her Moorenko’s Ice Cream. A niece had suggested the cow’s “moo” at a Rosh Hashana celebration, and Soorenko’s trademark lawyer loved it.


Soorenko, 58, was dishing out


vanilla, blueberry, honey- lavender, ginger and other flavors at a demonstration toward the front of the store.


She told me she was a fitness


trainer in McLean for 30 years, but she quit her job, got divorced and lost her parents all within two years. When she and her son went west on vacation around nine years ago to take a breather, she fell in love with some wonderful ice cream, which she will not name, and decided on a new pursuit. “I was going to bring this ice cream back here from out west, but with this particular company, you can’t ship it. I started looking at [making her own ice cream] and thinking I could figure this out. So I went to ice cream school


MARK GAIL/THE WASHINGTON POST


Susan Soorenko at Moorenko’s Ice Cream Cafe in Silver Spring. She founded the company in 2002 and moved to that location last year.


in New York.” At a hotel in Tarrytown, north


of New York City, she paid around $1,500 to learn the art of making ice cream. She studied under Malcolm Stogo and Bill Lambert, both respected experts whom she found through the Internet. Soorenko finished ice cream school in 2002 and wrote a business plan with help from her brother, who is a real estate developer and owns a commercial photography studio. He helped find a consultant to help her apply for a Small Business Administration loan. She took the plan to nearly a dozen banks before Eagle Bank in Maryland gave her a $280,000 loan at 7 percent interest. She recruited a real estate


agent she knew from her fitness days to help her find space in a stand-alone building in McLean, barely big enough for an ice cream kitchen and a front service counter. “I wanted to be in my own neighborhood. I wanted my kids to come there after school,” she said. Her business plan called for making ultra-premium ice cream, a designation for a product with very high milk fat — at least 17 percent of the ice cream mix. She guessed it would create demand in restaurants and hotels, a business-to-business model that would bring in steady, reliable year-round revenue.


The U.S. Department of


Agriculture says a dessert has to have at least 10 percent milk fat to be called ice cream. Below that, it’s something else, like gelato, which can have 4 to 10 percent milk fat. Standard supermarket brands might have 10 to 12 percent milk fat. Between 12 and 14 percent is designated premium ice cream. Between 14 and 16 is super-premium. Above that is ultra-premium. The more milk fat, the more expensive the ice cream is to manufacture. Most ice creams include milk, cream, sugar and sometimes egg yolks. Soorenko’s mix arrives in 21


⁄2 -gallon bags, and she adds her


own flavorings to make one of her 50 different ice creams. “The higher the milk fat, the lower the ice cream is in some other ingredient. The milk fat may be squeezing out sugar or something else. The high-fat product makes it taste good, so you don’t need to eat so much of it,” she said. That doesn’t work for me. But Soorenko said the fat content anchors the flavor better. When I talked to her last week, Soorenko had just received 350 gallons of mix at her Silver Spring ice cream factory, which she took over from another local manufacturer in March 2009. Soorenko has barely broken


even over the past eight years, but 2010 could be her


breakthrough year. She left her small factory-store in McLean (she calls that store “my biggest mistake” because of its expensive rent) and last year moved into a new, larger space in Silver Spring with freezers and ice cream machines that allow her to make more ice cream at less expense. Demand for the ice cream has not been a problem, said her brother, Barry Soorenko, who handles the books. The problem has been making enough to sell at a large scale. About two-thirds of her


projected $800,000 in annual revenue this year comes from wholesale customers, which includes Whole Foods. That’s about double last year’s revenues. She also sells to hotels such as the Omni Shoreham and the Westin Dulles, to the Baltimore Country Club, and to 60 restaurants that range from Comet Ping Pong on Connecticut Avenue to Willow in North Arlington and to Pesce in Dupont Circle. Her ice cream isn’t cheap. She


charges wholesale customers $52 for 21


⁄2 gallons, which is about


gallons at $2.50 to $3.50 a scoop, which will reap them several times their cost. And a pint at Whole Foods is $5.39; the grocer pays about $3.25 for that pint, which is a standard grocery- industry markup. She ships her ice cream in rectangular boxes in two Moorenko’s Ice Cream trucks. Soorenko has 17 employees.


twice what it costs her to make. But the customers can sell 65 to 80 scoops of ice cream from those 21


⁄2


Labor is her biggest expense, consuming around 25 percent of revenue. Ingredients and mix account for 25 to 30 percent more. Rent, utilities, trucks and packaging eat up most of the rest. Soorenko, who owns 100 percent of the company, said she takes a draw when there is enough cash to pay herself. These days, she works hard to spread the word about her brand. Her demonstration at the River Road Whole Foods was one of three going on that weekend. Her sons were hawking the dessert at Mom’s Organic Markets in Rockville and Alexandria. Soorenko wished me a happy


Ice Cream Month. heatht@washpost.com


Follow me on Twitter at addedvalueth.


THIS WEEK, JUNE 28-JULY 2 This busy week of economic


data will be capped off with a June jobs report more important than usual — all of which may offer new insights into whether a string of disappointing data in recent weeks is a fluke or a trend.


Monday Personal income is projected


to have risen a healthy 0.5 percent in May, and personal- consumption spending 0.1 percent. Those numbers would suggest Americans’ savings rate has perked up after moving down in recent months.


Thursday The Institute for Supply


Management releases its manufacturing index, which analysts expect to show continued strong expansion in the nation’s factories in June — though at a less robust clip than in May. The index is expected to dip from 59.7 to 59 points; numbers above 50 indicate expansion. The industrial sector has remained a bright spot over the past two months.


Friday


Private-sector job growth was much stronger than expected in April (218,000 positions added) and much weaker than expected


Neil’s Must Reads


What lessons do previous U.S. financial crises— those between 1980 and 1994 — offer? The Federal Reserve Bank of Kansas City has published a fascinating online book about the experience of Bill Taylor, who was a top Fed bank regulator and FDIC chairman during that period.


Find links at washingtonpost. com/mustreads.


in May (41,000). So which one reflects the true state of the labor market? Forecasters expect that the answer is somewhere in the middle, with a consensus projection of 113,000 new jobs, but if the figure is closer to that puny May number, it could set off alarm bells that the jobs recovery is in major trouble. Focus will be on the


private-sector payrolls, because the total figure is going to be affected as temporary U.S. Census Bureau jobs are cut. — Neil Irwin


NEW AT THE TOP REID H. JACKSONCOMPUSEARCH SOFTWARE


Giving employees the freedom to put expertise to use in service of larger goals


I didn’t set out to enter the world of acquisitions and procurement. I started in nuclear engineering,where I trained naval officers on how to operate the reactors for their submarines. It was a tremendous opportunity to build leadership skills. As a 22-year-old, I was training


fresh Navy recruits and some very senior folks who may have had 20 years of sea experience. As you can imagine, I had to respect people who were organizationally reporting to me but had vastly more knowledge and experience. That was a great launching point for a worldview. It’s about being the expert in all things. It’s about relying on the people in the organization who have that expertise, drawing it out of them and giving them the freedom to deploy that expertise with the broad direction of where you’re trying to deploy it. I still apply that today.


Whether it’s sales, product development or client delivery, it’s not about me setting the agenda day in and day out. It’s me setting a point on the horizon that we’re all headed to, looking to the team to do its part and yet giving them the freedom to deploy its expertise. There aren’t many engineering jobs centered on leadership. They tend to center around technical expertise. Whether rightly or wrongly, I perceived that as a limitation. I decided to explore management and leadership as a career. So I went to business school.


Entering a typical


right-out-of-business-school career track, I joined a big consulting firm as a management consultant and got exposed to a lot of different business problems. I left that to join a five-person small strategy consulting shop. I was responsible for the selling, delivery, collecting and developing of the products we were selling. It taught me the value of self-reliance, especially after coming out of enormous organizations where I had all the


COURTESY OF COMPUSEARCH Reid H. Jackson


Position: Chief executive and president of Compusearch Software Systems, a Sterling-based provider of acquisitions and grants software. Career highlights: Chief operating officer and president, Compusearch Software Systems; senior associate, Booz Allen Hamilton; vice president, Commerce One. Age: 40. Education: BS, mechanical engineering, Clarkson University; MBA, Dartmouth College. Personal: Lives in McLean with his wife and two daughters.


support resources in the world. When the dot-com bubble burst, I knew the public sector could benefit from some of the technology capabilities and discipline we’d been bringing to clients for years. I joined Booz Allen Hamilton and worked with chief acquisition officers. There, I discovered Compusearch and the software it produces, which much of the government uses to write its contracts and grants. I got familiar with the company, and so we acquired them. When we help transform


agency operations in the area of acquisitions and grants, we’re materially moving the needle on how quickly and efficiently taxpayer money gets put to work. That’s what gets me up in the morning.


—Interview with Vanessa Mizell


Please send nominations for New at the Top to newatthetop@washpost. com.


On Mondays, The Washington Post offers Capital Business, a weekly publication covering the region’s business community. A one-year subscription costs $49 and is available only to Post subscribers. Visit washingtonpost.com/ capitalbusiness for more details.


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