Inside Fuse Energy: Alan Chang on Building a $5B Energy Giant and Chasing £1B ARR

This episode is sponsored by Deckdolphin. Fundraising can be tough. You build a deck, you send it out and you hear nothing back. You don't get enough feedback. Deckdolphin changes that. Get honest, actionable feedback from real VCs within 48 hours. Submit your deck today, go to deckdolphin.com and start booking more investor meetings with a better deck. Hello and welcome back to another episode of Riley Unicorns. Today we're joined by Alan Chang, Founder and CEO of Fuse Energy. Alan first came on the show back in January 2023, when the business was very early in its journey, focused on building a full stack energy company. Fast forward to now, Fuse has raised lots of money, but recently a 70 million series B, a 5 billion valuation. Alan recently posted that the next big milestone was a billion of ARR, which is a great milestone to be heading towards. Alan, thanks for joining us. Welcome back to the show. It's great to have you back on Riley Unicorns. I'd love to just sort of reflect a little bit on how the last three years have been and obviously been great success from the outside looking in. But what were you right about all along and what were some of the things that you've had to learn and adapt through those years? I think one thing that's a stage true from beginning is our mission remains the same, right? To lower cost of energy, to increase energy per capita, so all this remains true. So I'd say one thing that has changed a lot is how we get there. So I think we we probably underestimate the complexity of the whole industry, right? There is a long-wind parts. There are many things happening at the same time. It's truly a very, very complex system. And I don't think there's a single person that knows how everything works. So yeah, basically, I think the things we need to do to achieve the goal needs to be much more than we expected. So one of the key problems that we face every single day is basically working with the grid. And so the grid has huge timelines, so anywhere from 15 to 20 years of delay to connect to the grid. It's just no way to run a business, right? It takes way too long. And actually this problem presents not just for energy, but also in any industry that consumes energy. So where it's a data centers or warehouses or skyscrapers or whatnot. So yeah, so to truly solve this problem, you actually have to become the grid. And the only way you can become the grid is to buy your way in. So we're actually in the middle buying our first grid. And we're starting very small, but the ideas we work our way up to much larger grid. Tell us what that means to buy a grid. It is no different to buy any other company except your regular, then monopoly. I think the way it's covered is like, you know, you're basically buying a poorly run coffee shop, but there's maybe a 10 block queue to a coffee shop. And if you can run your coffee shop much better, much more efficient. You know, that's how you can increase revenue off your coffee shop and make it a lot of people happy right? And last time we spoke, Alan, we talked about some of the benefits of being an outsider to the industry because you obviously had a career at a revenue before starting Fuse and had a huge amount of success there. But in the last few years since we spoke, you have achieved hundreds of millions of revenue. You've raised a five-plian valuation like reflecting now on those pros and cons of being an outsider. What would you say about them? I wouldn't say the pros and cons. I don't think actually there's a lot of pros of being an outsider. However, if I was an insider, I would have tried to do something about it much earlier. But I think obviously there are a lot of cons being an outsider, right? You know, you have to learn something, you have to do something you've never done before. But I'll say like, the key thing is you can assemble a very, very good team that wouldn't have otherwise existed in the industry because if you think about what top people care about, right? They care about having a lot of responsibilities, they care about making impact, they care about making, you know, working with other great people, and obviously they care about the comp, right? Which I'll say traditional energy companies don't really provide any of the love. So I'll say we're in a very unique position where Fuse can offer all four. So I think that's really our only secret weapon. I mean, like for years, octopus have been kind of known at least in the UK as the disruptor energy brand. And I've heard they're scared of Fuse. They're worried. Like should they be worried? And why haven't they innovated yet in the same way as you have? Well, I'm not going to speak far of anyone specific in the industry. I think regardless of what you're building, as long as you're building, you have I respect. But one thing I would say is like, if we thought the energy industry was a good state, we wouldn't start Fuse in the first place. Energy ultimately is like super complex domain. And it depends on how much of that domain you want to engage, right? Like for example, you can ignore 95% domain and get by. And I'll argue that's actually what I love energy companies are doing. So if you want to get to be truly, truly great, you have to go super deep and understand all the complexity and willing to actually go super deep, right? And all the whole thing. Otherwise, I don't think it's possible to to choose a mission. I think that's really interesting because we interview a lot of founders on here. And often they'll say things like, oh, if I knew how hard it was, I wouldn't have ever started. And actually, Alan, it feels like you embrace that complexity. You're like one of the only founders I can think of that we've had over 200 plus interviews where you're like, I wish I'd started earlier because now I've realized how hard it is. What is it about incredibly hard complex challenges that really does attract you? And what gives you that belief that you're the right person to solve it? Yes, so for me, it's basically impact the problem. I think what I was saying is that this is one of the most important problems in the world right now. I think second is like this complexity sparked my intellectual curiosity. And when Charles and I discussed the starting company, one of the criteria is that we really was, you know, it has to be a problem that if we weren't for us, it would be solved. These are things we care about. And I just hope as energy take all those three boxes. I think we're embracing complexity and I think complexity will only go up from here. But I think what gets me very motivated is building a great team and attacking this problem because I think it's a bit counterintuitive. But the harder your problem, the more important the problem is. I think the better talent you can track. And I'd say like we have I'm pretty happy with the team. I go about it with every day to solve this problem. What are some of the tangible achievements that you're most proud of in the journey of use so far? It's very hard to pinpoint exactly one one thing, but I think there are some numbers, right? So we have benchmark against our cost energy. So I'm not going to say the price we pass on to customers, but our cost energy with benchmark against the whole industry. And so far we've lowered, you know, from beginning to end, which is today, we're lowered to about 15%. So some of that cost savings would decide to pass on to customers, but some would decide to keep as margin. But that's like the efficiency game we've made so far, 15%. And where's that coming from? Is it labor? Is it great? It's a combination of many things. For example, it could be from automation. Like something as simple as automation. So like, you know, last month, we launched our AR cost support. So that gets us some cost savings. But it could also be our building engine. It could be also from our production and demand forecasting, just having a more accurate and precise forecasting compared to everyone else that allows us to buy exactly how much we need, as opposed to over by under buy, which basically create an unintentional position, work and lose money in the market. And another example is our EPC team. So building utility scale generation, we're able to save roughly 30% in capital compared to everyone else because of just you know, better execution and just in housing building things in houses, both outsourcing. So like there are many more levers, poor to achieve that 15% and the more we do this, we're more realize actually there's so many more the wisdom pool. But yeah, I'll say that's a key achievement, 15%. It's amazing. It is amazing. And I'm a happy customer. I've been a customer since we did the podcast basically because I think it was still a weightless when we first did it. And I was on the weightless the memory soon as I could. I switched it to fuse and it'd been very happy customer sense. And I wanted to ask what are some of the other levers that you've got planned, you know, you recently posted next.1 billion ARR and presumably some of these levers are part of getting you there. So what have you got coming next? Yeah, so probably the product I'm most excited about coming this year, it is a micro-solid battery product. So if you think about the problem of conventional solar, you need to own your own roof and you need maybe 10 to 20 grand of your own money to install it. So if you think about like that's not very accessible to most households. So we bought a product where it costs just over you know a thousand pounds and it's going to be like roughly 2.5 kilowatt system of solar and battery. And all you need to do is plug it. Right. So it's going to be like ikea style assembly. So it's like the 10 minute roughly 10 minute assembly. And then you can start generating your own energy, right? So you can hang up, you know, we'll give you a mount. You can mount it off your balcony or if you have a backyard, put it in your backyard or if you're unfortunately don't have night of the room, you can just get the battery to. And we're talking about three year payback, right, of the system costs. So you get money back in roughly three years. And also it's going to be a very, I'd say well-designed product, right? So I would say traditional energy products are not the most beautiful. Don't look like look great in your home. So I think this is going to compliment your home decor like super well. And it's going to be an integrate seamlessly into a few of that too. That's super exciting. It will get me to change. I have to say home batteries have been on my radar for a while. Alana, we love getting to know that the people behind these companies as well. And one of the things that's talked about a lot in in startup land is how the most successful founders balance these two things at once. They balance insane self belief, but also a huge amount of self doubt and a fear of not being enough, a fear of not achieving enough. Does that resonate with you? Yeah. Of course, I think for me, my fear of not moving fast enough probably drives me more than say, possibly, or as a reinforcement. So yeah, for sure, that does resonate. Why the drive to move so fast? Why is that the thing? Because time is a more important commodity. Actually, if you think about it, I think the biggest enemy for us is time. It's actually not capital. It's time. If we don't use that time efficiently, like I think we would not have succeed. And are you always looking forwards? Or do you ever give yourself credit for what you have achieved? No. People say, don't think what we achieve is, you know, I'll say it's a small achievement. Yeah, I'll just, I'll just call it a small achievement. And yeah, there's so much more we can achieve. And yeah, I, I really love that. Does that tell us about the mindset? So does that mean do you feel like contented and satisfied by what you are doing? I'm not satisfied, but I'm definitely not miserable. I'm having fun. I'm not satisfied, but not satisfied. And now, obviously, revenue is a bit of a talent machine. There's been a lot of revenues that have gone on to launch businesses. And you mentioned there that like relentlessness to sort of move so quickly. And revenue had that culture and we're not going to get into a whole culture thing. But was that like learned at revenue? Was the, you know, Nick ever stand up and say, this is how you should be. You know, you should literally care more about the time than anything else. Or is it just inherent? Yeah, I can't speak to other people, right? I can speak for myself like, like what drove me to Revolent and what came me there for a very long time is the fact that this was an environment and to be honest, like I think for me, it's always kind of been like that. So it was kind of the perfect environment for me. But I would say a key thing for me was the fact that this environment has succeeded, gave me the confidence and reassurance that actually this is the right way to build a company. Like that was my key learning. With other revenue experience, I would probably doubt myself a lot more. Yeah. You said you're very forward looking like, can you picture yourself and fuse in five to 10 years? Yeah. So, well, a difference between five and 10 would be very big. Hopefully. One of the big 10, right? So hopefully we're about with our largest energy company, maybe other continents, maybe another, not all the world yet, but on the continent. We would have meaningfully load energy costs by 20, 30% maybe. And whether you're household or business, you can definitely feel that cost saving. Because ultimately energy is a boundary constraint for a lot of downstream industries. If you think about like AI, probably the most obvious example, but also like chemicals, artificial fertilizers. So all of these downstream industries that, you know, heavily dependent energy, you know, hope at least some of that constraint is removed. And I think lowering carbon emissions comes for free. If those, you know, first two things are achieved. Very cool. I'm obviously a consumer, but what percentage of your revenue is B to B? How many businesses do you guys service as well? Right. Right now, close to zero. Really? Like we are these are, you know, we love to do businesses. We just, we have so pretty small team. We try to grow that too. But yeah, like I love to do it faster. So I think of it. It's even the local pub there on the pressure at the moment with minimal wage going on. Not really short contribution or, you know, they're all closed. Yeah, whether it's a local pub to, you know, there's still, you know, a steel factory, right? We love to lower your energy costs. And Alan, how, how will you guys avoid being disruptive to yourselves? I think the only way to stay ahead is to keep pushing forward. I think startups is like, like a shock if you don't move forward, you die. I think we just have to keep moving, we just have forever to move forward. So will you have a research lab? Would you acquire companies? We will build those research teams. The idea is that we start, you know, simple technology. So that's why we were focused on solar storage. We're not taking any technical risk, but we will build research teams. We want to create an environment where the bless, nuclear researchers, nuclear engineers want to work in, right? Yeah. And you said earlier that the limiter isn't capital. It is often talent and speed. What are the hardest roles for you to hire for today? It's engineering. The best engineers are behind the mind. And I'd say like a lot, you know, top engines, so haven't heard about us. I think it's really like top, top engineers and actually design is two. Yes, for example, like we, the Microsoft battery product, it's going to look beautiful in your home. So not only has super high utility, like we believe every product, you know, probably needs to be. I know I mentioned this like last time right there, you know, the person won't have lunch with us, you know, ends up right, ends up for our. I believe this like principle, like the things we build needs to be not only useful, but beautiful. And this product we're building will be beautiful to look at your home, right? It's not going to be an ISO. And you know, if we design an ugly product, it will be super functional. I don't think people want it. Yeah. And so hiring is the challenge. Like how do you get around that? Like how do you attract the best people? Yeah. So, yeah. So right now for every engineer or designer, I so do the, you know, fine interview and I explained to them, this is what we're going to do. I also explained to them, this is going to be like, where intense is going to be tough, you know, do what you will, that information. And I said, majority of people get very excited and they go from, you know, oh, this is just another job interview to, oh, actually, this is super exciting. This could be my life's work. And when you're telling them how tough it's going to be, what are you actually saying? Are you saying like, you're going to be here, you're going to be sleeping in the office, you're going to be working weekends or like, are there some anecdotes that you share with them? Well, like I don't, I, I, I'm not thinking sleeping law for this is strictly necessary. I'm not going to stop you from sleeping law for if you want to, but, you know, it is non-curge. Right. But like, there, there is going to be a lot of work. I'll family, it's a bit of four-second energy company. Another way of saying is like, you're building, you know, 50 companies and one. But if you're building 50 companies, one and you have a team size of maybe 1.5 or two companies. Right. Then by definition, I mean, there's going to be more work on a pro individual basis. So I mean, I think it's, it's, it's that, right? It's, it's for the individual. I think this is a great environment for the individual that has high agency, once impact, once ownership, and once they make a difference. Yeah. And like, what are the signals in interviews that signal to you that an employee is going to be an amazing employee? Or can you only find that out later? Yeah. So I think, I think, obviously, like the first thing to do is like, where did they have the skills, right? To do the job. So, you know, if you design it, you know, you have design skills, individual skills, as well as like UX skills for engineer, you have, you know, programming, problem solving, etc. But if you think about traditional soft skills, right, or the attitude of people, it's actually quite simple, right? When you, when you explain to them, just like I did, like this is all the things we're going to do. Yeah, these are all my markets we're going to go. These are products we'll build, blah, blah, blah. And do they get excited? Like, do they lean in, right? Not really enough. And you can tell them the word language. If they say like things like, oh, depends on compensation, I depends on blah, depends on, you know, probably not a right fit. Right. And has that been a reliable signal for you? Yeah. But actually, actually, it's actually simple, but they're just self-selected out, which are, you know, totally respect that, right? You know, there's, I don't think, for users for everyone, right? And if you don't join, you can still be like a very talented engineer or talented designer and I saw a right fit for you, right? And that's totally okay. But yeah, just I think I think it's more about, you know, we're very transparently, you know, explaining this is what's going to be. Then also prizes. If you like this, if this is your thing, please join, right? Love that. What do you feel more strongly now than you did when you last came on the show? I think my conviction that this problem could be solved is higher than before. Although the, in other the complexity, my estimation complexity went up. But why I know about the problem was to went up and I'm more and more convinced this can be solved. So is this the next, is this the next $100 billion company, Alan? Is this the next trillion dollar company? Well, I think, I think we're successful. I think this could be, you know, I think it's going to be a lot more than that. Time to get in now. It was probably time to get in when we first. Yeah. And for any of the, I mean, Tandy, we got these and candidates listening, so they should all have. No, it's great. Well, Alan, thank you for sharing all of that. We've still got our final two questions, but just sort of reflecting on the conversation. What you guys did at Revolute is obviously exceptional. exceptional to go again in a completely new market and do what you've done so far. In my only scene like a small achievement because you've still got such an important mission to deliver on. But I think what you're doing is great and a very happy customer and obviously if you achieve what you think you will, then it will be a huge success for yourself and for Europe and for everyone involved and it will be their life's work. So it's great to hear. Our final question is our dinner party guest game. So you hinted earlier that you'd remembered the three that you came up with last time. So I've got them here in front of me, but you probably remember them. But if you would have dinner with any three people now, who would they be? I've got a very spectacular those three to ask. Ask jobs and Enzo Ferrari. Still going strong with them. Thank you so much for coming on right in Unicorns again. Obviously it's been great to have you back and we love seeing the people that come on the show just go from strength to strength. We can take absolutely zero credit for what you've achieved. Obviously, but we just wish you continued success as you take on very important problem for consumers, businesses and the world. Man kind. Man kind exactly. So thanks again for coming on and sharing more about how it's all gone. Thanks for having me. Thanks Alan. That's it for this week. 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