I’m Oriol Vila, I founded holaluz.com 5 years ago, I’m a Civil Engineer, I studied an executive MBA in 2009 and there is where I met my partners Carlota Pi and Ferran Nogué and decided to found the company.
Can you briefly give us the Holaluz pitch about what it does and how it differentiates itself from other utility companies out there?
Holaluz.com is a utility company, we sell energy. We know people don’t know about energy and even don’t care about energy and that’s okay, it’s not our goal to teach people about it but make things easier for them at a very fair price. Our product is a commodity and thus we can only differentiate from competitors on price or service. We actually have the lowest price and also a customer centered customer service, where we treat people as people and not just numbers (as our competitors tend to do). It is actually lots of little things that make our service better than the others: you can do everything from our website with a single click, we always send electronic invoices, our energy is 100% green (we treat all the stakeholders with the utmost respect).
At what point did you and your associates conclude the industry needed another player in the ring?
I think we realised we had to do something when Ferran’s mother received an 800€ invoice from the electric company. We tried to help her addressing the issue by contacting their customer service. They didn’t know what to do, they didn’t give clear answers, we had to repeat our story hundreds of times to different people and we realised that something that should be really easy was in fact very difficult. Parallelly, European Union’s laws were pushing all european governments to liberalize the energy sector so we decided it was a good moment to start something different.
Can you talk about the team dynamic between founders? What is everyone’s unique role, and where do your strengths compliment each other? Do you disagree often?
At the beginning we were just three, and we had 100 things to do so we split the work according to our abilities. We are three engineers who studied the same MBA, so in theory we would totally overlap, but our past work experience was different enough. Carlota has always been involved in the electric industry, so she managed everything around how to purchase and sell electricity, Ferran was more involved in the project management so he was more sales oriented and I took responsibility of the operations and the technical part of the project as well as the CEO title. At the beginning, when you are three, having a CEO doesn’t make a difference, but now that we are bigger I take the CEO role differently, Carlota took a PR role talking to the press, investors and so on and Ferran is working as the R&D leader and he also manages bank relations. We still talk the company strategy together though. We have the same vision of the market which is really good, but we sometimes disagree in small steps. After we discuss our disagreements we always end up with a better solution than any of our isolated ideas.
Considering you’ve only just raised your first financing round, how did you manage to make that first batch of money last so long?
We started with our own 300K€, each one of us managing to get the money from friends and family. From there, we took advantage of our specific sector, and for example we launched a prepaid option for some customers which helped our cash flow and financing our grow. We also came to an agreement with some providers that allowed us to sell their energy and paying them back a few days later. We can say that our cash flow strategy allowed us to last 5 years without any round of investment. We could keep growing at the same pace without any investment but we think now is the time to speed up our growth.
What is your customer acquisition strategy?
For small and medium businesses, we have an offline channel where we sell directly to SME, just to have the feeling of the market directly. Our offline sales team has two or three people. We also use external channels that already have a portfolio of customers and they want to sell something else. We provide them with a product on electricity and it works quite well. It’s 100% variable so the more the customer consume the more the channel receives.
We also have the online channel where we use AdWords and all the online strategies available trying to acquire customers and leads converting them online or through a phone call. Our acquisition cost is more or less 6–9 months of the customer life time value. Our churn is below 5% so we estimate a customer can be with us for an average of 7–9 years.
When you started you were online only, right?
When we began we wanted to be 100% online. Then we realized we wanted to reach companies, not only retails, and when your electricity expenses are around 10K a year, you expect more than just the online advantages.
Regular customers are acquired mostly online but because contracting is not as easy as we would like (customers have to provide info on the KW contracted, yearly consumption, 20 digit numbers) we have to help some of them on the phone to ensure conversion.
We know you’ve been fundraising for a while now. The process can be very long. Can you share with us how you set about seducing your investors?
A friend of mine once told me that “as an entrepreneur you must be always looking for money because you never know when you are going to need it”. As exaggerated as it might sound what I take from it is that “once you know you need the money the work has to be done in advance, otherwise you won’t have time to raise it”. With more or less effort and resources I would say we have been in touch with investors since the first day. We had the opportunity to close a couple of deals during these 5 years but we decided we could keep going on our own. We are now in a really comfortable situation for fast growing and we felt ready for an investment that could help us with it.
And how did you finally settle on Axon Partners as investors?
We know a lot about our businesses and vision whereas investors are more keen on the financial aspects, and that’s why we contacted Creainversión last summer, an M&A boutique to help us with the process. They have a huge network and also having someone who perfectly understands both sides of the story as a mediator helps you talk the same language investors do. We spoke to 20 to 30 investors before meeting Axon Partners. We really liked them, which is something I think it’s mandatory when you are talking with a financial investor. We had a similar vision about the future and we decided to close the deal.
Now that you’re a big company, how do you manage to keep a fresh attitude? Tell us about your company culture* — what’s it like working at Holaluz?
We want to deliver the company values to the customer. If the people don’t feel our values, our customers definitely won’t. We like to treat our people the same way we would like to be treated.
We need people who feel comfortable in an environment where there’s always something to do.
We cannot compete with Google on salaries, but we make sure our employee feel we value their work.
If you want to get told what to do every day, don’t work for a startup.
Where do you see Holaluz two or three years from now?
We currently have 60k customers. During the next 2 years, we have to multiply that figure by 3 or 4. The problem we are facing right now is that people don’t know the brand because we are too small. Now, only about 10% of the people will know Holaluz. If you are a mass market product you need to be known, and that costs money.
We are using electricity as our main product line to acquire new customers, but what we really want to do is to manage anything related to energy for our customers such as gas, solar panels, electric vehicle, domestic batteries…
What kind of advice would you give to other entrepreneurs who plan to compete with the big players of their industries (eg. big utility companies)?
First, if you see the opportunity, believe in it. You need to convince more people, if you are the only believer, maybe you are crazy. So you need to find someone else who believes in the idea.
Quote: “Those who say it is impossible shouldn’t stop those who are doing it”