Building the Billion-Customer Energy Company - Ep32: Greg Jackson

(upbeat music) - Cleaning up is brought to you by the Librake Foundation and the Jeladini Foundation. Hello, my name is Michael Librake and this is Cleening Up. My guest today is Greg Jackson, CEO and founder of Octopus Energy. Octopus is a challenger utility in the UK, which has grown over the five years since it's founding to serve just under two million households growing at about 30,000 per week. Octopus, under Greg's leadership, has also started to expand overseas and to offer its unique technology platform to other utilities. It's a fascinating story. Please welcome Greg Jackson to Cleening Up. So Greg, welcome to Cleening Up. Well, thank you Michael and welcome to Octopus's lockdown office where I am very, very lonely. - Now, I hope, despite the fact that it's a place of work, I hope that you've got yourself a brew there because I certainly have. It's evening here and I'm stuck in Switzerland again. So cheers. - Yeah, well, I've got a delicious beaver tan neck oil from the Octopus fridge. Ordinarily we get the whole team together on a Friday night. We have fridges full of alcohol and non-alcoholic beverages to bring our team together and through lockdown, we're not getting through it very quickly. - Well, so I think, you know what, we'll come back, I suspect, to talk about your leadership style and the culture that you're building at Octopus 'cause it's very particular, I already know. But let's start, we just give us an update of where are you with Octopus? Just so you know, our audience is, they're all super engaged, they're all very smart but they don't know everything about the energy system. They certainly don't know the UK utility landscape and they may not know Octopus, strange than that may sound. - So Octopus was founded about five years ago by a group of people led by me who came from a technology background. We built technology platforms and a whole bunch of industries working for third parties, you know, from SAP to, I mean, retailers, loads of companies. And I think when we sold that business, we looked around to say which section of the world has not yet been disrupted by technology. Energy was this kind of sector which served pretty much every customer in every advanced economy, but was largely undisrupted, I guess, because of regulation. Not only that, but, you know, energies at the forefront of the fight against climate change. So there's this opportunity to use technology. We thought to drive down costs and improve service and tackle climate change. Where we are today is we built a platform crackin' which is designed to be a global platform for running energy companies. We've got two million household customers here in the UK to be precise, 1.953 million. It'll be two million by the end of next week. And in addition, we've got businesses in the Octopus Brown in Germany and in the USA. And we've also licensed our platform to origin energy in Australia, to Hanwai who run a retail business in Australia. We've licensed it to Eon and Good Energy here in the UK. And we're also, we've formed a joint venture with Tokyo Gas to launch off to Japan. We've got an office in New Zealand about to launch there. So it's pretty exciting, Michael. That's extraordinary. Let's just back up a little bit and put the UK piece, first of all, into context. So you've got 1.93 million users. And at the end of next week, you'll have 2 million. So you are growing at 70,000 a week? Not quite a year, it's 1.953. 1.953. Oh, sorry. You're putting up 50,000 a week, does that mean? Yeah, it's 29,000 last week. OK, 1,000. But you're forgiven for rounding up. These are big numbers. And that puts you where in-- because we've got the big six. And then you've got the various challenges. Where does that put you? Yeah, I think it makes us number five in the UK market now. Yeah, so when we started, people said, how are you going to kind of tackle the big six? And well, I think we know our one. And I think that's the customers we're serving directly here in the UK through licensing. I think you say to two other groups. So in total, how many households would be in some way being touched by your platform? Krakow. Yeah, so the number of households at the moment is probably around sort of three and a half million households in the UK. And then the total number of licenses globally is now 17 million. So sooner or later, about 8% of our customers are going to be served by people licensing the platform rather than us. We've got an ambition to get to 100 million customers by 2027 on the platform. And I'm beginning to worry that might not be ambitious enough. It doesn't sound very ambitious. When you look at all those countries, you're going to be in. Yeah, no, you're right, though. It's fascinating. Energy is such a colossal market. So I'll revenue now. Look, we're a 4.5-year-old business in market. Our revenue is 2 billion pounds and a $2.5 billion. And yet, our global market share is probably about 2.4%. We've got an incredible amount of work to do to make any kind of difference at all. Right. But if you look at the UK, your home and pioneering market, 3.5 million homes, what are they? There are 23 million homes. So that's not bad. That's 15% doing the math probably wrongly, but on the fly. That's pretty good. And it's a talk to me about that platform, what does Krakhan do? Why is it driving so much growth? Or is it Krakhan that's driving it? Yeah, I think it's really important that it is. So we didn't start out as an energy retailer that built a technology platform. We started out to build a technology platform. And in order to be able to test our hypotheses about how energy could work, we needed to build an energy retailer to test the platform in market. So octopus energy is a retail business. Although it is incredibly important, and it's the driving mission for the vast majority of our team, part of its job is really to prove the way for what we think technology can do to drive the energy transformation, to drive cost down, and help consumers benefit from green energy rather than seeing it as a problem. And so there's a few-- there's a couple of things that are pushing the cost down. And you also talked about green energy. So what you're saying, is the green incidental or is the green core that start there? Yeah, that's a really good point, right? So the green's core, but if you look at Krakhan today, it's a bit like a iceberg. The bit that's visible is it is a better engine for running an energy company. It's great for customer experience, customer service, efficiency, driving down the cost of operation. It does everything from managing the telephony and digital contact with customers right through to helping power loads of machine learning for forecasting, all that sort of thing. But actually, deep under the hard, what it's designed to do is make the transition to renewables a positive, economically, financially, and energy. What I mean by that is renewables behave different than fossil fuels. We all know that. With fossil fuels, national grid or whatever equipment in any country is in vernacular, can wake up every morning. There's a fairly predictable demand curve and they'll just turn on and off fossil fuel stations to meet that need. In a renewable world, you have to invert the way you think. National grid wake up in the morning, they look at the weather forecast, and then you have to turn demand on and off to meet those needs. Now, the traditional energy system finds that a really difficult idea. But actually, you know, if you're really at the core of how you build relationships with customers, including the deep technology for it, then you can really start to match time consumption to time of generation. It is a great fortune that exactly the same time as we're building more and more renewable generation, we're changing how we consume energy. So, for example, an electric vehicle, you're typically here in the UK, an electric vehicle might hold the best part of the week's work of black trees for a typical house. So, you've got this big discretionary load, even before we get into things like vehicle to grid. What we need to do is be matching the time we're charging that car with the time we've got renewable generation. Once we're doing that, by the way, we can monetize renewable generation better, which means that it can get cheaper, we can attract more investment to it. That then pays the way to sort of decarbonised heating using the same technologies for matching consumption and demand. We can really move to a renewable system cheaper with that kind of tech, those kind of consumer relationships. And I think, for a long time, energy companies, utilities, networks, grids, governments, are all debating. But the only way really finding out what you can do, it's just getting out there and doing it, finding out what works with customers. It's how we found that a smart phone with a touch screen was better than the old mobile phones. It was only when someone built one that consumers adopted that we discovered that was the way the future. And it changed society. And I think we can now do the same with energy now and one of the things that you have done presumably you couldn't have done it without cracking without this platform using the traditional software that everybody else has got one of the things you did was you launched the agile tariff, which is the UK's first time of use tariff, right? Yeah, so I mean, agile was the whole point really was to say, look, we as an energy company see dramatic changes in the cost of electrons throughout the day, day to day, you know, month to month. And yet typically consumers are past a flat cost if we look at other kind of consumer markets where prices vary other tomatoes or strawberries when you get an abundant crop prices alone when you know the crops are less abundant prices are high and that enables efficient markets to clear. And I think with less waste, you know, and with better value overall for consumers when we need to do the same in energy and I think, yeah, the agile tariff, the idea was, you know, we essentially have a formula which we publish that connects the half hourly price of electricity to the price consumers are paying in that half hour. We then really critically actually we published alongside that a bunch of APIs now consumers don't need to know about the APIs APIs are there to enable companies people that make electric vehicle charges, you know, companies that make heating systems whatever to automatically read these price signals and then optimize on behalf of the consumer. So many of the consumers will literally just get home pulling electric car and they don't need to think about the price electricity, it will just optimize based on this tech. I think the other bit is of course, consumers can choose to optimize manually on top of that, so the UK's got a simple heuristic electricity is expensive between 4 p.m. and 7 p.m. It's also expensive when it's not windy. Now, that just means that basically if you get home from work and you cook, you know, dinner for your kids stick the dishwasher on a half past 7 in the evening, it'll be a lot cheaper than seeing an hour past 6 you don't need to check the price is just going to happen. So I think it's really interesting for me that by publishing the creating that product, we were able to see our consumers responded and it's been I think it's really heralded away to making renewables beneficial for consumers. Rather than the world we were stumbling into, you know, people seeing renewables as being a cause of high taxes and so on. How hard was it or how easy was it to pass on that price signal to consumers because this is not something that everybody's doing and it's not something that's been quite a lot of nervousness about that because it does mean that at certain times price will be high and everybody starts, you know, squeaking about energy poverty and goodness knows what, so this is the regulators are not I've been pushing you to do this, have they? No, it's quite interesting. I mean, our first dynamic to actually a daily tracker, the idea of that was that customers never need to think about energy bills again, like, you know, essentially if you know that you're always falling the market. It's a bit like with the stock market, you know, instead of actively trading, you can just have a tracker product. So we kind of tried that. But a journalist said to us, what about when prices spike and we showed, you know, the data said, like, it's just not a big issue in the grand scheme of things. But she said, look, the people worry about that. So what we did with our dial is, based upon that feedback, that question, we put a cap in the price will never exceed about 35 pence a kilo hour. We've modeled it so we can take the risk on those rare spike occasions and the rest of the time, underneath that, the consumers got full dynamism, including by the way the price is going negative. So what we've got is got it against the kind of thing you can only do when you're iterating in market. But I think we've built a mechanism that really helps consumers kind of use energy in ways which are sympathetic to the system, at least if they do use it in ways which are sympathetic to renewables, then they'll get very cheap electricity. But it still protects them from the worst. And we could have spent months debating that, but we actually spent four days building it and now the world can see how it works. And it's great, you know, if you go on Twitter, you'll see you must have seen this a lot, lot more than me. You will see people saying, yes, I made one pound 20 charging my car last weekend or whatever it was. So there's definitely that sort of the the gamer types that really, really enjoy that. But how much difference does that agile tariff make in terms of actually moving electricity demand around because for that, you need not just the gamers, you mean, I was going to say normal people like me, but that might be pushing it slightly. Yeah, so I think, I think let's separate dynamic pricing within the energy system from the way in which the consumer experience of the pricing. So agile tariff is one of I think 27 different types we have that use price signals to change the way which people use electricity. By the way, it's not that you go online after choose one of the 27 right, we make all that very, very easy for people. But so with that, agile, we saw a 70% reduction in peak usage usage peak times massive change. And most of the people and not the gamers, most of the people are just plugging electric vehicle or indeed a heatsink system, and it's doing it automatic with no thinking on top of that, someone just have that simple model in mind, which is, you know, just try not to use your washing machine dishwasher between 4pm and 7pm or your tomato dryer. Using that side of that, you don't have to do esoteric three in the morning, right, just avoid the peak. I think, um, but outside that we also have things like, you know, electric vehicle tariff, so I've got fixed slots. So midnight 30 to 4.30. Yeah, for example, it's very cheap on ones where you can choose your cheap slot, you know, you can choose a slots 8pm to 11pm. The short the slot you choose the cheaper is so using all days with what we found is we can really use just price signals to move consumption around to flatten the curve at a very granular level. And you know, what we really hope is over a period of time, you'd be able to take a substation network of street. And as people are electrifying transport and heating, we can flatten the curve and get dramatically more out of the network as it stands. There are two big benefits to this, I think, Michael. The first one is that, um, obviously reduces the need for additional infrastructure to get more out of your existing stuff. We make it last longer. We can electrify and decarbonize cheaper that way. I think the second one is that, unlike many other times in energy. One person optimizing in their own self interest, you know, using the cheap slot, using the cheap electricity is actually pushing the price down for everybody else as well, because they're reducing the competition for electrons when they're scarce. So we're keeping the infrastructure cost down, which is good for everyone. And we're making better use of electrons when they're available. And that kind of behave, that kind of economic model, means that even when you've got relatively few people in the gaming category and then quite a few people and optimized category and some other people of time use category, they're all contribute to a cheaper system for everyone. We are electrifying transportation. I think that's already clear. That's kind of, you know, that the thundering herd is going off towards EV. We are about to thunder. The herd is about to start thundering towards heat pumps, or at least Boris has said, you know, the prime minister has said we're going to have 600,000 installations a year. That's a lot of electricity. Does the benefit of what you're doing? Is that other diminishing returns or are there accelerating returns? I think they're accelerant returns. It's a great question. Right. So essentially today, you know, energy in the UK. And in fact, even in most compare, in fact, all the competitive markets. It looks like Gospan, you know, the sort of the Soviet era central planning system, where we may allow a tiny little bit of kind of entrepreneurial competition right at the edge with this kind of consumer. But governments are still planning how much of each kind of generation they're going to have to meet needs. They're still kind of planning these kind of monopoly grids and monopoly charging systems. That is just like it was in 1980 that Mikhail Gorbachev visited London and asked Margaret that to who did the central planning because the Soviet Union is best trained economists were doing it and they had cues at the bread shops. He saw no cues in London. And she said it's price signals. Now, you know, without price signals, what you end up with is, you know, milk lakes and butter mountains and and at the same time shortages. Or massively, I respect inefficient systems. So, you know, what we're talking about is finding ways to harness price signals throughout the system. So that investment is attracted to the right places. The product of that investment is monetized optimally and consumers use as are exposed to price signals. Participants in companies such as ourselves are able to invest where it's going to be most effective. So what that means in simple terms is let's take products like agile right today in the UK on a windy day. We literally pay wind farms to turn off their generation right because the vast majority of the UK electricity system isn't exposed to price signal that says right now electricity is very, very cheap. Right? So we just turn off the generation. This is bonkers, right? because at other times, we still turn on coal power stations sometimes, right? Tons of gas at other times because there's not enough wind. Now, if we can use price signals to mean that, you know, every green electron that we generate can be used by someone, can be put to use. Then first of all, we will more efficiently price those electrons. That will attract investment to the right places. Secondly, we'll enable technologies that shift consumption, that make the most of those electrons to work based on the basis of for example cheap electrons during times of high generation. So, you know, what we don't need is government's choosing how much battery storage we're going to have here. I mean, that's a government could be great, but it's but all monopolistic, right? As an energy company, we should be saying, first of all, can we get our consumers to use electricity when it's abundant and when the system is empty? And if we can't, then, you know, for example, what we might try and do is we'll say, right, we'll build some batteries at the end of the street. There will so couple electrons when they're abundant and they'll be available for our customers when they're not. And then you can scale that all the way back to generation. If we follow those price signals, then I think we're going to track more investment into generation because more electrons will be monetized. We can drive down the cost of lectures because we're using them rather than throwing them away. As we drive it down, electric vehicles get cheaper to run and electric heating becomes ever more realistic. So, I guess for me, you know, there is a huge compounding benefit in working like this. It's like data. Do you remember when you're, I mean, you and I are probably similar ages, Michael, I think you're a bit younger and certainly more handsome, but your mobile phone used to have to delete text messages because there wasn't enough memory to store them. And now you record every moment of video of your kids' lives. You'll probably never even watch them. And they replicate 25 times on your computer and in the cloud and everywhere else. You know, that abundance of data, it's not like, you know, kind of the world of data storage providers and cloud platform providers and so on. It's kind of all gone bust because the cost is dropping every year. We've found utility for it. And I think energy is like that. You know, we've got this opportunity to relentless the every year drive down the cost of electricity now. And to do it with zero carbon and it will create whole new industries just the way that ubiquitous of data and computing power I've done. I've got examples by if you want. Well, so you look, it's music to my ears. You know, I let you go on there because this is exactly, you know, I wasn't campaigning but I was trying to persuade people at price signals matter that we needed to move to reverse options to get cheap renewables. Here's a little long fact. I actually worked on Perestroika. I was in the Soviet Union in 1990. I like to say working for the Ministry of Aviation and Special Constructions. It wasn't quite as simple as that. And you're right, there's no I was meeting Soviets all the time who were convinced that I was lying to them because I said that at a building site, you would just go and, you know, if you need a bricks, you would just kind of send out a fax to a bunch of builders merchants and get the best offer and the bricks would arrive and they're like, no, no, no, no, no, no, no, no, somewhere in the system. So I hear you completely. I hear you on that. Give us one or two examples of that because you wanted to. And then I want to ask a question which is more difficult. Yeah, great. So look, an example for me is I discovered that we kind of got this series of customers doing vertical farming. Now, you know, vertical farming turns out to be farms that are inside warehouse buildings or whatever in towns and cities. And in theory, it sounds very nice. You know, they grow the crops locally. You see that food miles. It's a sealed environment. So 99% of the water that goes in the building leaves in the fruit and veg. And there's no need for pesticides. The biggest single cost is energy. And in fact, I was talking to one and 55% of their cost were their energy bill, electricity. Using something like agile, what they've been able to do is the crops now sleep at the times that electricity is expensive, right? Because it's a sealed environment. So the diagonal cycle, they can just optimize it based around, you know, some combo of what's cheap is what's best for the crops. As a result of this, they're now able to be cost competitive with crops have been growing. Certainly crops have been grown in other countries and they're there forated it. Increasingly cost competitive with things that have been shipped and trucked. And so I think the interesting thing for me is a bit like no one's spotted when the iPhone was launched that that would be the end of the, you know, the kind of million dollar cabin medallion in New York because it would pave the way for you. But similarly, with renewables, no one's spotting the incredible number of industries is going to transform or swarm when we have these endless green electrons. Okay, but let me ask you the difficult question. The UK is fairly fun off. We don't have equatorial sun every day. In fact, the ratio of solar output from the solar on my roof in W2 is 14 in summer to one in winter. So there's no solar in the winter. So it was talking wind. And the wind can disappear for a couple of weeks, two, three weeks. And you're not going to solve that with batteries. And you're not going to solve that by waking up all your, you know, salad greens in those vertical farms and saying, right, you know, actually not waking them up. In fact, if there's no wind, you just put them to sleep for two or three weeks and hope to wake them up at the end. But that's not going to happen. So how do we deal with these long wind lulls, particularly when we've electrified heating, because those lulls could happen, you know, just at a moment when the temperature's plummet. Yeah, absolutely. I mean, first of all, we don't, the whole idea that we have to solve this problem centrally is kind of wrong, right, it's muddleheaded, right, probably signals solve problems. Now, you might say, in principle, we have to be able to solve it because otherwise we can't go this way. That's cool, right? But I don't have to give you the answer. Just like, you know, those things to which the iPhone or the smartphone with the answer, because you would have to administer the answer. Because it, you know, yes, we don't want to have centrally even price signals. But if the lights go out, or if there's no heating in the old homes, and they, you know, die of hyperthermia, then it means centrally. Yeah, sorry, Michael, let's be really clear. We'll get on to that in a second. The problem is easy to solve. The problem point really being, though, that it is hilarious that, you know, we don't sit here discussing, how are we going to meet our potato needs when there's been a harsh frost in spring, right? I grew up in the 1970s and 80s, and I remember the centrally planned conversations about, you know, what was going on with the Ministry of Production in British Leyland, right? Sorry to the non-British audience. The point being that markets can solve problems brilliantly. So when I give you answers right now, which I will do, they will almost certainly be far from optimal, because the market will cream anything any of us think of, right? And it will do it faster and cheaper in one way. Just like people didn't solve the electric vehicle problem through central planning. In fact, two or three years ago, the experts were still saying, you know, batteries weren't going to be the answer, and Lydia Mayan had all these production problems, and you couldn't get enough precious metals. It just turns out it's all nonsense, right? Once you've let market forces do their work, we're discovering alternatives to precious metals, we're discovering new deposits, we're finding new forms of battery technology. Now, I say all that, great, there are some people in the Ministry of Hydrogen who would disagree with you. I mean, one great problem with centralised planning is once someone is an expert in the hammer, every problem looks like a nail. But the next thing then is that, and the great thing about competition is that, you know, companies they've got invested in loads of different technology are all going to compete and someone will win. Now, to answer your question about the UK and kind of getting heating and wind and so on. First of all, this kind of capacity myth, right? I've heard people saying, well, you know, if we're going to build enough wind capacity to handle winter heating, we'll talk about the laws in a second, but there's going to be a lot of excess capacity. It's like fantastic. That means for a lot of the year, we're going to have endless green electrons that are near enough free, right? That's pretty amazing because what it enables us to do is loads of great things that we can't currently do with cheap green electricity, guilt-free carbon-free electrons. Now, once we're enjoying living, you know, so much to the year very cheaply, actually, we can afford as a nation in the UK's case here to have more expensive solutions to handle things like the laws over winter, right? So, for example, do we handle the laws? By first of all, you've got wind farms all the way around the UK, and my understanding is that, you know, if you have the entirety of the circle of the, in our case, the UK's own pet bed, then you're down to, you know, typically the worst case is four or five days of law. Now, it might be longer than that very occasionally. But once you've got that kind of capacity, you're then able to say things like, you know, are we using our spare capacity to generate hydrogen, right? And we store it, right? And it's, although it's expensive to generate hydrogen, it would be bonkers to use it for domestic heating, for example, to use it for intraday storage, for multi-day storage, even for potentially, you know, longer than that, it's a great idea. And that's that's one way in which we can plug it. But you know, once you've got price signals operating, Do we find that, you know, enterprising companies decide that running, you know, a new undersea cable to Iceland is going to help kind of provide cheap electricity during those times. Do we tap geothermal sources in other countries or deeper geothermal here? They're all possible, but you need price signals to reveal what is the optimal solution. It's the point in reading. So your question, your opening question, the physics mean that we can ease the answer, the question about what do we do about, for example, electrified heating, even on windless days. But the economics will reveal themselves far more efficiently if we have price signals. OK. Now, so I accept all of that. You know, as I say, you're preaching to the, preaching to the converted. I do think that there will be, it's a legitimate for ministers to worry about that bit when, you know, you and I would say, well, that isn't going to be a problem for probably 15 years, really, to get to that amount of renewables, 10 years, certainly. But the thing is, if we do it iteratively, Michael, we can stop at any point and pause. Right. So let's iterate our way there. Yes. And if we're finding a bit difficult, we pause for a while, and we say, you know, we'll keep some of those gas plants running just while we kind of get better solutions. But we can do this iteratively. We don't have to solve it all in a big bang. And it's, you know, my grand today, she's 96 years old, and she's living in a sheltered accommodation, essentially not seeing anyone other than her carers day in, day out because of COVID. And she's staying in touch with the world because of a $50 Android tablet 10 years ago, or just before the iPhone launch, I think 2007. So 13 years ago, if you said to people, how are you going to solve that problem? They would never have come up with that solution. And it happened because we got the technology into the market, competition drove the price down dramatically. And we opened up solutions, no one had thought of it. Well, in fact, the French government came up with a solution called Mini-Tel. Mini-Tel. That's a problem. And they were going great guns until, of course, the, you know, the private enterprise and the price signals all worked, and all of that stuff got ripped out and junk. A couple of times, you've referred to yourself as an energy company. Are you conflating energy and electricity, or would you ever see yourself getting into the molecule business, whether it's gas or hydrogen or anything else? Yeah. So first of all, we sell a billion pounds, 1.25, 1.3 billion dollars of gas per year as it stands, and that's going up a lot. I just don't want to be selling gas, all right, you know, I want to be moving away from stuff that causes climate change. So our job is to meet energy needs of customers just with lower prices and less CO2 every year. Now, we've looked at alternatives, we looked at should we be like, you know, fully back in the idea of hydrogen for heating, for example, I just think when we look at it, if the mission is to drive energy costs down, whilst going renewable, sorry, whilst going, you know, kind of a, whilst tackling climate change, the answer looks more like electrification. That'll be the cheapest way of doing it. Right. Now, I think we've established that you've built this platform because it enables the customer and obviously the energy company to kind of play these markets and to be very flexible. It sounds like it could be very expensive. It sounds like sort of thing that a conventional utility would go crazy trying to build or, you know, is it expensive when how do you control costs? Even on the platform itself. The platform itself. Yes. Yes. How do you keep those transaction costs low? Yeah. So it's interesting. Like, we didn't come from an energy background. We came from a technology one. And I should have. I'm, I'm terrified of the thought that energy companies are going to go out and try and build technology. You know, the history of companies in non-tech sectors building good technology is not great. You know, just like energy companies kind of talk about how special energy is, I think tech companies will talk about how difficult tech is. And I think tech is difficult because at the very core of it is architecture. Now, if you've got a board made up of finance people and maybe people who understand operations, there's no one in there that really knows whether the tech that you're building is going to scale whether it's well-architected, whether it's secure, whether it's, you know, whether you should delay a project because actually it's going to get the architecture right or whether you should keep the pressure up because actually, you know, entropy means that projects will always expand to fill them out some time you give them. So I think one of the things for me is, and this doesn't just apply in energy, it's around the world, boards need to learn about tech. I will just interact with you. Let me go in a second, but just on exactly that point, when I joined the Board of Transport for London, I asked them how much they were spending on writing code or on their IT as a whole. They've never thought about the question. The top all the board members and the senior members of management, the executive committee, not one of them had written more than, you know, 100 lines of code back at school. And I've written probably a few thousand, but that was it. I was like the most tech savvy person. And it turned out that we were spending somewhere of the order of a billion pounds a year through TFL and its various contractors, which they never thought about. There's always people be varying away writing code on behalf of TFL with no oversight whatsoever from senior senior levels. So we tried to change that, but it was hard. It was hard. That was not their culture. No, it's not. It's not easy, right? And I think that's just explored that a bit because, you know, that we live in a world in which technology is the driving force for change, whether it be, you know, kind of the opposite of like social media or the stuff around the corn like machine learning. And you've got people who are buying this that don't understand it. And so what you'll typically have is a board who will appoint, you know, senior executive to manage tech. If you look at what most of them are doing, they're not defining, they're not architecting. They're procuring. Right. So then you've got a load of people whose job it is to actually kind of integrate different sets of procured tech. You've got all these best in class solutions being squished together by contracting firms who are not, who literally got misaligned interest because what, what, you know, they'll make more money. The longer the projects go on, the more they go wrong and need fixing. Now, don't worry, I'm not saying any of them are acting kind of with malintent there. It's just all the incentives are misaligned. Now, you can imagine running your finance function like that. We expect people that are running companies to have, you know, really good knowledge of finance, you know, not just be able to read a P&L, you know, but you're able to think about discount rates and, you know, the impact of different costs of capital and all these kind of questions. And they're expected to do that themselves. And yet, when it comes to is our code any good, they will typically ask a senior person in their tech function who will get a less senior person, who will get a third party, who by the way will then get another third party. And eventually comes a line, then it says, oh, they say it's good or they say it's not good. And you can't check for yourself. You'd never do that with your finance. Yeah. I heard you give a statistic on the cost of administration, you know, you talked about how many sort of SKUs, stock keeping units, the average energy company has, and you compared with Amazon. Can you run through that here? Yeah. Right. It was just what are the observations we made when we were starting the business. So the numbers might be slightly out of date, but Amazon at the time had 330 million different products, right? Which, by the way, it has to get to you by, you know, some combination of planes and ships and trains and automobiles and, you know, people knocking on your door when you might not be in. It's got to take payment in whatever way you want to pay right there and then. And you know, by contrast, certainly in the UK, most energy companies got two products, gas and electricity. They've got a meter in your house and a pipe and a wire to deliver it. They've got a direct debit, you know, typically in a government sanctioned estimate for what you're going to use every day. And yet somehow, Amazon's cost of administration was around 2% of revenue. And in the UK, for energy companies, it was near a 14% and you've got to say, like, you know, that kind of spoke to the opportunity for tech, right? And that was just tech to smooth up your operations. Never mind the dramatic improvement you can create for customer experience, customer service. And then, you know, paving the way to that much more dynamic, renewable future we talked about earlier. Now, you've done some interesting, that's a fabulous statistic. Sort of 14% for two products and 2% for 350 million or whatever the number was. You've done some really interesting things about how you organize the company to deliver service. There's some wet wear as well as software, some humans that you've organized as well, correct? Yeah, so look, I think it was quite interesting. When we employed about 20 people in customer operations, our operations team, it's not a core center. The person you speak to does every bit of solving a problem themselves. So there's not a front office back office or any, and there's not lots of vertical specialties. So you know, it's a more fulfilling job. I think it was the sociologist, the Weber, who talked about alienation, you know, like I don't know if it's pin factory, maybe inefficient, but it kind of alienated people from the product they were making. where as a medieval, gargoyle, kind of craftsmen conceived of made the whole gargoyle. And so, you know, that kind of ownership we tried to give to our customer operations team. But when, um, seeing the job through end to end, but when, um, when we were growing, we found that somewhere between 20 people and 50 people in the customer operations team, people started to lose that sense of ownership. They wouldn't answer the phone as fast because they thought somebody else might do it. They kind of had a sense that maybe they'd done more than their fair share, so it's someone else's turn. And so what we did was we were like, how do we reinvent what we were when we were a tiny business? And we broke our customer operations into teams, each team is about 10 people. Each team of 10 people look after, I know, about 78,000 customers. And they do everything for their 78,000 customers. Each team is completely self-managing. So we don't have a sort of central planning function. And, um, and they'll tackle different problems differently. They'll organize their days differently. Um, and, um, they'll organize their priorities differently. But, but the statistics for the performance of every single team, every single individual are all published. Yeah, they're all available on our data system. So everyone can see, however, else is performing. And if someone's trying something that's kind of doing better than they're doing, well, they can adopt it. And now, this isn't some sort of hippie free for all because, you know, first of all, every single member of the team is their, their shareholder. So they all want it to work. Secondly, because everything's published, you know, kind of, you're continually discovering what's better. And there's no real, there's no excuse for not improving. And I think finally, there's the real reward for success, which is teams that are doing well grow. You know, I'm going to explain this in form two teams, creating new leadership opportunities for everyone. And the interesting for me was that as a manager is every time something is not working, you have a desire to micromanage to sort it out. And we have to learn not to do that because otherwise the teams won't sort out of themselves. Secondly, as a manager, you have a desire to standardize, you know, people say to me. But what you do if what if one team's not not performing, it's like, well, you know, the whole point here is. It seems to do better than average, so we've got to do worse. And we have to accept that because otherwise we wouldn't get the constant constant improvement. So as a manager, you can look at that going literally, I know that that team could do a better job. But if we intervene too much, too soon, we lose the magic of the system. And it's a really interesting way of building this highly scalable business that by the way, he's growing. At 50% during the pandemic. No, it's great because you've created a learning system. And I think that, you know, as I look around, I love to find these examples of how learning, you know, small nimble competitive, also cooperative and learning beats massive centralized standardized. And there are political lessons that I don't think we'll go into at least maybe not until we meet in person for, you know, for next time we go for a beer in London. But, but I hear you on letting the teams not micromanaging one thing I used to do was if we had a problem and invite everybody who want to be solving the problem to a meeting. And then not show up. Brilliant. I love that. You know, it's such a simple thing. It's like they all know what they are at the meeting for. They all know what the problem is. They know the problem better than I do. Why do they need me? It works. It works. Also, I want you to talk about the role of machine learning. You thought about it in a very blasé way, just earlier, you said, oh, you never use it for some forecast and call volumes. But, but that is embedding machine learning is also one of the secrets of how you've kept the cost down. Is it not? Yeah, I mean, look, I'm, first of all, to really get the most out of machine learning, you need to have a lot of data that is essentially all in one place. Now, of course, you can kind of simulate all in one place by scooping up or putting a metal layer over it. But the more it's really all in one place, the easier it is to deploy a wide range of things so that the machine learning kind of algorithms, the boss can look at as many inputs as possible very efficiently. And then we have everything from, you know, what are my favorites is the workforce planning. So a company of our size, we now employ, I don't know, maybe 500 people in customer operations in the UK. And maybe a bit less than that, but I kind of banged you that typically we might have, I know, 10 or 15 people working workforce planning to kind of schedule to work out how many phone calls we're going to get and how many emails and either kind of work can be done by each team. And we have zero people doing that. There's just a machine learning algorithm that is continually looking at how many calls are coming in, how many emails are coming in. And it's also looking at how long they're lasting. And then it's able to look at things like how many bills we've sent out, how many meter reading requests we sent out, how many people are kind of receiving a price change notice or whatever it will be. And it takes all of that data and then generates a forecast and it generates a forecast for each team. So very granular 10 people in the team. It creates a forecast for every 15 minutes through the day of how many people need to be available, for example, to answer the phones. And the team leader can tell it, look, today I want an average time of two minutes and it would create a forecast for kind of the staff requirement. Or you flip it around and say, today I've got like seven people available because there's a couple of ill and one in training. And it will tell you what the average wait time will be by 15 minutes segment and you can move people around as required or say, hey, look, I know you're on training, but it'd be great to delay that or whatever it will be. So that machine learning is basically, it's quite funny. I sometimes think like, you know, the big fear of AI is we're all going to be working for robots. And in a way, we're beginning to experiment with that here and it's working okay so far. Similarly, every single phone call is transcribed live. Now today, we'll have had about 20,000 interactions with customers by phone and email. So every single phone call is transcribed live. Every male, every text based interaction is already in text format. The machine learning algorithms then read the conversation and they work out what it was about. They work out the extent to which we've resolved it and we have live data. Literally live on screens when we're all in the office of what is going on in the business in terms of what the topics are, what the problems are, what do we need to do to resolve them. Now, the interesting thing there is, of course, as a management team, we're not going to go micromanage with it, but that might tell us that it's time that we improve the software that reads smart meters or, you know, the teams need more training on some topics. Or, you know, when the teams come and talk to us about a problem with payment adequacy, we kind of understand what's going on and teams themselves can look at that and say, why is our team getting loads of payment adequacy in the other ones aren't. Is it something to work, but all of that is not based on the kind of subjective, one of the team have chosen something in a drop down, which, like, let's face it, when you get a drop down, say, what's this about, you always end up giving up in the end, right, is two tedious usually go down to the bottom and you look for other. Yeah, you know what, that is, I do that myself when I'm healthy customers, you know, the reality now is you don't have to worry about it because the machine's doing it. We forecast every smart meter we've got at the half hourly level for months ahead, right, every night these machine learning algorithms are calculating a forecast for the consumption at the half hourly level as far as we can go. And they put confidence intervals on that based on the weather and all these clever things now all of that then gives us like with no human intervention, tremendous amounts of efficiency in the business improves service, but drive costs down. So once your question really about cost, you know, we now sit on 150 billion rows of data is going by 2 billion rows a week, it's all being worked on by machines as well as humans. And yet, you know, our, we were benchmarked against a sort of incumbent rival, our data center costs are 20 times lower than theirs. So I think we've reached the point where we kind of get a picture of what you're doing and it is, it is revolutionary. There's no question. Global domination, you know, you talked about you've got 0.2, 0.4% market share globally. What's the right market share? What's the target? You said 100 million by 2027, but even that 100 million households, that's going to be out of what a couple of billions. So it's still only 2%. Is that the right number? I mean, this really does tell you what's wrong with energy, doesn't it? If you look at things like, you know, e-commerce or even transport through something like Uber, you know, what we've seen is the global platforms have been able to transform the way in which those sectors operate. Because what you're learning in one market at scale, you can transfer to other markets at scale instantly through global platforms. And I think, you know, in energy, we have to go that way. Today, even the biggest global energy companies typically have a completely different stack. And I don't just mean software stack. I mean, a business stack, everything is different from one country to another. Now, that's holding back the fight against climate change. We'll correct a cheaper green transformation. If the world is able to kind of solve this problem across all the geographies, roughly at the same time. So I guess, you know, it is pathetically under ambitious for us to think about 100 million customers on a single platform. And yet, you know, as a startup, you know, it was embarrassing to say we're going to get a million, you know, now we're looking at 17 million licensed by way, 18 months ago, that figure would have been less than a million. So don't go wrong, I think the exponential is pointing the right direction. It's just scary to think about where it leaves. Well, is it scary or do you just need to, you know, you're the CEO, so you don't need the first person to do it. You've come up with this word "Electic", was it "Electic"? Well, yeah, is it green tech, clean tech, "Electic" and "Electic"? I mean, who knows, right? We need the word. I mean, tech, I got kind of burned, you know, using those two like, and we all did, and I'm not sure what they mean, but, you know, but, but what I was going to say is that you as CEO, surely have to be the first person to start imagining the billion household, you know, energy platform, because, you know, the same thing would have been said about the billion user media company, or the billion, you know, and then you've got Facebook, and then you've got Amazon, I don't know how many users they've got, but I'm sure it's in the billions. And certainly, you know, it's billions are not scary numbers in other sectors, and if that's what you're doing, lean in and say, yes, we will have a billion accounts. Yeah, well, I think one of the biggest chances we've gotten this is the government and regulatory systems that mean that, you know, instead of having a global internet for energy, every country has a different national grid. I mean, if one of the, I don't mean the company, I mean, they sort of, you know, grid and network system differently regulated in every way. So it's not just the way you present consumers that's different. It's the way you charge for access. It's that they're all trying to solve the problems by putting batteries wherever they think they need them or whatever it be. And I think, you know, when we start our company, people said, how are you going to tackle the big six, you know, the big six whether the six big incumbents in the UK. Some countries by way, I've got a big one, right? And others are nationalized. So there's certainly some in Europe and, you know, at least Europe's got some degree of competition. But then, you know, behind the big six were really big companies like, you know, the oil company's big oil. But actually behind the big oil companies, you know, even bigger than them is big tech, you know, like, you know, what is it? Just by way of example, a shell or BP, what's their market cap? Probably around a hundred million dollars. So when we started the company, you know, people said, how are you going to tackle the big six so they look like big companies, but, you know, they were just big by UK standards. You know, if you were lining them all up, you know, bigger than the big six were big oil. And I think if you look at big oil, typically, you know, shell BP, basically, market caps of about a hundred billion of some unit, like dollars or pounds. And then behind them, a big tech where you've got, you know, companies now heading towards trillions. And so one of the problems is this kind of view that countries have of what scale is. And where, you know, if we're going to tackle something on the scale of climate change, we've got to go beyond national level solutions. And that really doesn't mean that countries have got to work out how do they open up not to, you know, we've got this kind of terrible thing at the moment where a country, a government will often define a solution and then put it out to tender. So you're having a different solution, tender than each nation. Now what the private sector does best is actually create solutions to innovation and we need to open it markets to that. Is this not just telecoms prior to the telecoms restructuring, this is 19, this is British telecom or whatever, 1980, is it not? Yeah, exactly, you know, 1980 was a long time ago, right? You know, industrial planning or worry about what happens if the system fails and trying to micromanage it, is this not exactly the same? And today, you know, two MIT members are both complaining today about four hour waiting times to speak to a telecoms company, one of them is coming to the office because it's going to be two weeks before a telecoms company is going to come and fix her internet. Right. So telecoms is still broken. Now, you know, that's bad enough. I'm in central London and my mobile phone doesn't work in half the building I'm in. Right. I mean, this is just unacceptable. Now, you know, if we can live with telecoms like that, how are we going to live with an approach to climate change that's so badly implemented. Don't get me wrong. If we're not careful, that is exactly like that, the tackling it as a fight against climate change can be analogous. But if we let if we find ways to let companies use grids like the internet, where we will find ways to use the infrastructure governments have put in place to get more out of it on behalf of their citizens and anyone could imagine, then we can have a much cheaper, much cheaper faster green revolution. But if instead each country is defining its own solution, no, it's going to cost a fortune to take forever. So the final question, a final topic, you have broken through to, you know, you're sort of nearly two million UK households, three and a half million that are using the platform, two million under the octagon, three and a half million on the platform, you've got 15 million around the globe, you've got this vast growth rate. When I'm minister and the Chancellor know you, not only they know you exist, they've been to visit. So you're right at the center of things. Are you optimistic, you know, we've got, we've got the UK hosting COP26 in Glasgow at the end of this year. It's focused on green finance, are the planets aligning and are you optimistic or is it sort of a blip and then like the telecoms example in 40 years, we could still have the same nonsense going on because there wasn't enough faith in the sort of solutions that you're proposing. Now, first of all, I am optimistic, right. Fortunately, economics is aligning with the environmental need, you know, renewable generation is getting cheaper every year. Electric vehicles are getting cheaper every year. I mean, I was looking on Alibaba and you could buy a five seats sedan with 250 mile range for $15,000. Fundamentals are going the direction we need. Now, whether we will as societies optimize and get this as cheap and as fast as possible, you know, it's still debatable, but at least the economics means that we will reduce our climate impact dramatically. And governments, I think the pandemic in particular has crystallized governments views that change can happen faster than they ever realized, you know, the way in which supply chains adapted to lockdowns, the way in which, you know, companies adapted to remote working. I think, you know, it's one of Microsoft said, you know, six years of change happened in six weeks in many countries. Well, now let's capitalize on the fact we've learned we can do that in one section, let's do it in the fighting against climate change. The top 26 is kind of, I think it's the first since, you know, the sort of Paris commitments are meant to have been implemented or we've begun our plans. So it's huge from that perspective. I think for the UK is the opportunity to double down really on being a country that's been doing well in the move to renewables. But the real race now is who can do them faster, bigger cheaper and to use your telecoms example earlier, you know, it must have been 10, 15 years ago that we started hearing here in the UK about, you know, internet speeds in career, the fact that in Poland, you could get, you know, same day broadband connection in the UK, we had to wait weeks and weeks if we were lucky. So, you know, there's still an enormous amount to be done. To get nations competing on how fast and how cheap they can do this. But I think we are seeing a doubling down of political commitment, you know, the change of administration in the United States as well is really going to contribute to that. And then in countries increasingly, you know, we're seeing politicians competing on who can do a better job of tackling climate change. It's been thrilling to see that here in the UK. So, you know, economics, politics and proof of disruptive capability might just be a lining. Greg, was there also part of the disruption that you just looked at the competitive landscape and said that customers are being poorly served, poorly served by the customer, poorly served by the regulator. I think one of the biggest issues is that we've got a sector that doesn't understand customers consumers. People repeatedly tell me customers won't do that, consumers won't do this. And it absolutely reminds me of so many other sectors, you know, we talked about mobile phones in which people thought customers wouldn't want a touchscreen phone with the internet. And I think far too often we've got policy that is being led by that kind of thinking. And it suits incumbent to suggest that, you know, you can't engage consumers or that, you know, we need to solve everything treating them as a sort of dumb off taker rather than a participant. So I think with all of us part of the reason for building a very consumer centric brand is really to prove that, you know, when consumers join us, they are more likely to kind of embrace new ways of using energy and to think more about kind of the cost and the climate cost of it. very good. Well Greg, you seem to be saying to the politicians, stay out of business but give us the infrastructure particularly the data infrastructure and we will finish the job. So on that note I think we'll leave it there but thank you very very much for joining us this evening on cleaning up. Thank you Michael it's been tremendous fun and you know I'm on beer number two so if you have three or four he knows what we might say. There'll be time for that lovely to see you. You too. So that was Greg Jackson CEO and founder of Octopus Energy building the energy utility for the climate change generation offering green and affordable power to a hundred million and maybe beyond that a billion households. My guest next week is Amber Rudd she was a conservative MP minister under Theresa May and also under Boris Johnson secretary of state for energy and climate from 2015 to 2016 during which time she championed the UK's move entirely off coal by 2025 and also led the country's negotiations through to the Paris agreement. Please join me at this time next week for a conversation with Amber Rudd.