Amit Chatterjee is pure Silicon Valley. It's all over his résumé--SAP, Cisco, Oracle. Software and IT are in Chatterjee's blood. So he's the last person you might expect to be leading cleantech's new charge. And that's exactly why he's winning.
"If it was a clear day, you could see the bay," Chatterjee says as he gestures through the expansive windows of his new office on a hillside complex in San Mateo, Calif., surveying the Silicon Valley landscape. "That's Oracle, and the hardware companies are clustered over there, and all the software guys are down here."
And the future of cleantech is right here. After last year's failure of an energy bill built largely around the cap-and-trade policy, which sets a ceiling on carbon dioxide emissions and allows companies to trade permits to meet it, Chatterjee's data-driven strategy to save the planet is showing a tremendous amount of promise.
The idea behind Hara--the word is pronounced "ha-RA" and means "fresh green" in Sanskrit--is to entice big businesses to undergo green makeovers by appealing to the bottom line: Gather data on how companies use energy (think categories like water, electricity and miles of commuter travel), then help them deploy better energy efficiency techniques that will produce major cost savings. Best of all, the model works for everyone on the green spectrum, from big oil to solar panel manufacturers.
This new take on cleaning up the planet has put Chatterjee's energy and environment management software company into hyperdrive.
Greening a CityArmed with Hara's software, the city of Palo Alto reduced costs on a number of energy fronts.
2005: 34 million
2009: 32.5 million
Natural gas (therms)
2005: 1.01 million
Unleaded gas (gallons)
Paper waste (reams)
Hyperdrive, by the way, looks like this: In 2008, after leaving his post as a senior vice president at SAP, Chatterjee took a pitch to venture capital firm Kleiner Perkins Caufield & Byers--the one that bet (and won) big on companies like Amazon, Genentech, Sun Microsystems and Google--and came away with $6 million in first-round funding, plus three cubicles in Kleiner's basement incubator.
Hara's software has a subscription-pricing model that ranges from less than $100,000 to a few million, based on categories such as user numbers and data types. It clicked for a lot of major organizations, including Coca Cola, News Corp, Intuit and even the City of Palo Alto in California. A second funding round of $14 million followed three months after launch, along with bragging rights that many cleantech companies can only dream of.
In December 2009, just six months after the platform's official launch, Hara estimated it had captured 50 percent of all deals in the energy and environment management sector in the United States. In 2010, Chatterjee tripled the number of his employees (60 and counting), and by the end of this fiscal year (in April), Hara's year-over-year revenue will be 20 times higher, with 10 times more bookings.
"American office buildings waste an asinine amount of energy, and what Hara has done exceptionally well is focus on the idea of corporate metabolism"--that if you save, you win--"instead of anticipating some kind of cap-and-trade scheme," says
Michael Kanellos, senior analyst and editor in chief of cleantech research firm Greentech Media. It doesn't hurt, he says, that Chatterjee is stamped out of the SAP mold. "He has the enterprise software sales pitch down. He knows exactly what to do, and what he does really works."
With competitors like Oracle and IBM stepping into the space, how Hara chooses to expand in the next couple of years is crucial. But based on Hara's trajectory, expansion doesn't appear to be a problem.
Two weeks after Hara moved from a 12,000-square-foot space in Redwood City to its new digs that are more than twice as spacious, Entrepreneur talked with Chatterjee about how he plans to help usher in a post-recession green era. (Spoiler: It involves trust, frugality and being a lot more successful than even he expected.)
Looking around, the floor is a bit sparse but, for once, there's enough room for the influx of employees Chatterjee expects to hire. To get ready, he even had new business cards made. "They're thicker stock," he says with a grin, "because we're planning on being around for a while."
You've grown so fast--too fast?
There's this quote by Mario Andretti: "If everything seems under control, you're just not going fast enough." I think that's relevant to building a company.
That sounds like it could backfire.
Well, you can't push all the boundaries at the same time. You leave it up to the team--and don't do the easy thing and get passive people who will work with you.
So what's Hara's contribution to sustainability?
The idea is that if we better manage the flow of data, we will create a greater good. Our message is fundamentally different from a political agenda, and what makes us unique is that we can address kilowatt-hours (kwh) in the lifetime of everyone sitting in this room. [A kilowatt-hour is how utilities measure the power supplied by one kilowatt for one hour.] The commercial and industrial sector in the U.S. uses 300 billion kwh a year, and I believe we can remove 50 billion to 70 billion.
Why did you pick the green space?
When I was a kid, my parents spent a lot of time in India, and the notion of being responsible around resources was very important. Delhi was a city designed for 1.5 million, and now the population is close to 12 million. Then one of my mentors, Shai Agassi, left SAP to start Better Place [a Palo Alto company that is developing an infrastructure to support electric vehicles], and I said to myself, "What do I want to do? And could I work on something that could resolve a significant problem?"
Delhi was in a kind of crisis management mode, though. Can you get people interested now?
It's good health to do energy now, but in 2007, you had oil trading at $185 a barrel. We've seen it stabilize, but we saw what could happen. People are asking themselves how much they care, and technology can drive energy efficiency in real scale and make massive change with minimal costs.
What's at stake?
If we move quickly to employ all of America's energy efficiency techniques, we could capture and potentially flatline the country's carbon footprint for 10 years--we could serve 9 billion people with the energy we have today.
What do you look for when you hire?
Everybody says hire great people. To me it means I trust that person to do this job better than I ever will or could. As a CEO and chief recruiting officer, you should be slow to hire. But when you find the right person, you need to know what motivates somebody to move in quick.
And when you've got them onboard?
You do everything you can to keep them happy and invested. Right around Christmas our first year together … we were sitting around a table and our chief architect told me that one thing different about [Hara] is that we shielded conflicts on the managerial level so the employees could focus on creating value. I was really touched.
You didn't have problems giving up ownership?
No. You have to give it away. Sometimes you get too much information and start acting daily instead of strategically. When you're trying to build a business, you can't worry about highs and lows while trying to design what the company will be. Some founders have 27, 30 reports because they want complete information, but … if you hire great people, it takes care of itself. You have to trust them to make 95 percent of the decisions and quibble over the other five.
Talent and money. Most people say the frugality is an untalked-about value at Hara. It's ingrained in the decision-making to stay at a hotel 5 miles out to save 50 to 100 bucks. Or to use teleconferencing to the point you need to make a relationship. Our senior vice president of sales says to spend every dollar as if it's yours.
So this nice new office …?
It's a cheap space! And we were patient. It took us months to find it.
Would you consider 2009's climate change conference in Copenhagen a disappointment?
It went horribly bad from a policy perspective, but we got a lot of value from it. Hara created a panel called "The View from Silicon Valley," and we were expecting maybe 35 people, but they were lined up the staircases. Everyone knew we were there, and I got invited to a lot of things, even a closed CEO session with Fortune 500 companies.
Why so much interest?
Anything you do has to have an ROI, and Hara makes it easy to design a strategy to find cost savings immediately. Silicon Valley has led market transformations before, but our message about energy [efficiency] was drowned out in a sea of carbon. But after Copenhagen, people who focused on fear and policy instead of cost savings took a hit.
You motivate corporations in two ways: fear or greed. It's hard to get people motivated if they're not going to live to see the result, but if you talk to corporations about profitability--spending $40 million now to save $60 million over the next three years--that becomes a compelling story for them. It's easy to talk about climate change, because there's a bad guy and a good guy in the carbon scenario, but … the problem is people tend to focus on academic solutions rather than figuring out how to do smart things to lower energy usage quickly.
Because when you think about supply side, you become paralyzed. The supply side requires $1 trillion in government investment, which has to happen for energy independence. So the demand side waits for solar panels to get cheaper, for windmills to pop up and other technologies that drive kilowatt-hours down.
If the government invests, what'll happen?
If we invest in the infrastructure, entrepreneurs will be born out of that. Back in the 1930s, when the government funded the construction of the national road system, what popped up? Mom-and-pop gas stations, retail sites--a whole new economy was born because of the American road. History repeats itself, and we should take that shot to solve it this way.
That was a pretty big gamble for those entrepreneurs.
Well, entrepreneurs have to balance between being a trailblazer and a pioneer. Trailblazers have the arrows in their backs--bigger companies can come along and kill their inventions--but pioneers come along and transform the platform.
What have you done to make sure Hara is in the second category?
We've opted not to participate in government agendas or partnership requests. Our mission is for our customers to see cost and kwh reductions, so we ask ourselves if this is going to benefit Safeway, News Corp or the City of Palo Alto. If we don't believe it does, we don't want to engage in that kind of dialogue.
Do you say no to potential customers?
We'll walk away from deals that drive us in the wrong direction, like if a company has inappropriate expectations or the organization is unwilling to change. When you're a small company, the number-one lesson is leveraging silence and "no," because it helps you create focus. What you do well is what you'll be defined for. Some of our current customers want us to go into areas we're not ready for yet, and we have to negotiate that carefully.
But your customers have also helped you expand.
Absolutely. Our launch customer was the City of Palo Alto. They were already thinking of energy and environment management and doing it in Excel, and when you have a customer whose vision matches yours, you accelerate innovation. They were using it to the bleeding edges, and they became sharp edges that helped us differentiate in the market. In March, we ran a customer summit with Al Gore as keynote speaker. We didn't know who would come, but we planned for 30. Over 100 showed up.
That seems to be a recurring theme.
It was the most inspiring moment. I felt that my company had grown up, and I was so wrought with emotion, it was hard for me to get through my speech. Our brand didn't exist nine months ago, and yet there were 100 people in the audience excited about interchanging ideas and talking about successes.
Yeah, after we launched, suddenly we were 18 people in six cubes in the basement [of Kleiner's building]. At that point we got the knock from Kleiner going, "OK, Amit, go find your own space."
Further evidence of your frugality?
It was the mother bird nudging the chick out of the nest. There was free catering there--it helped with the budget [laughs]. But we finally, begrudgingly to me, started paying for real estate in Redwood City.
And then in the next six months you captured 50 percent of the deals.
Well, we were looking at customer count, not revenue or market share, so we were focused maniacally on getting to 30 customers by December. The first time we unveiled the market data, you should have seen the sales guys' faces. They told me, "You forced us to do the unnatural!" But it was a very successful win, and suddenly it was, "Wow, we can do this."
So you don't care about the competition?
The mission should be the driver. You want to know what others are doing, but competition isn't going to make you better. It's about growing and how you convince more customers to use your product and service.
What are your plans for 2011?
I'm building a company to last, not to flip, and right now I'm looking at international expansion. We opened an office in the U.K. and are looking at other markets. Until we help utilities not have to build more power plants, we're not done, and our impact won't be fully acknowledged until we see kwh being reduced.
Who inspires you?
Jeff Bezos started Amazon around the same time I started Hara, age-wise, and has successfully navigated leadership and scale challenges at all levels, including a horrific economic downturn. And Steve Jobs. The most impressive version of Steve Jobs is when he co-ran Pixar and Apple. It's proof that the vision can be set by the CEO, but the team runs the execution that makes the company tick.
Any closing thoughts about where small businesses fit into the picture?
Hara is suited for more complex organizations, but a lot of things published by utilities or NGOs that relate to large homes can fit for small businesses. They're sometimes very quick fixes--insulation, thinking about how you leave lights on at night, power management for your PC, thinking about travel and how you do it. If you design those things into the process as a small company early, when you become large, it'll be part of your culture.
How Hara's software is driving change at these big-name organizations
|Carbon neutrality||Deployed a central platform that allows hundreds of users to share best practices and track progress across 1,000 facilities|
|Akamai||Establish a corporate sustainability framework||Modeled the company's complex network with 3,500 data lines, tracking energy use for thousands of data centers|
|Diebold||Reduce emission by 15 percent over the next five years||Automated the data collection process across different currencies and languages to forecast energy efficiency opportunities|
|Safeway||Reduce emissions by 6 percent in 2011||Consolidated data into a single platform for 1,800 stores, distribution centers and fuel stations|
|City of Philadelphia||Become the Greenest City in America by 2015||Set up a system to track and manage energy consumption and costs for 900 municipal buildings|