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Podcast Transcript: Matt Smith, solar without sales people.
























Speaker 1 (00:04):
Welcome to another episode of the Solar Podcast. Today Dave is talking to Matt Smith, Co-Founder and President of Project Solar. They talk about how his company just raised 23 million in funding, the future of the solar industry and how Project Solar is changing the renewable energy sector. Let's get right into it on the Solar Podcast.

Dave Anderson (00:29):
So Project Solar is a business, it's started to make some serious ripples, if not huge waves in the solar space so we're thrilled to get Matt Smith, one of the founders on the podcast. So Matt, if you don't mind, I'd love to get an introduction for our audience about who you are and maybe you can segue that into talking a little bit about your business. Maybe you don't separate the two, maybe from your perspective, they're one and the same.

Matt Smith (00:54):
Sure, yeah. Thanks Dave. Thanks for having us on. So yeah, Matt Smith, I was originally a high school English teacher and that's what I went to college for and then one summer jumped on with a tech company and the tech company was in its beginning stages, they were thinking about financing and how are we going to get this thing up and running. And so I helped them with funding just from past people that I knew. And one of the people was my was current business partner, Trevor Hiltbrand. And so I stayed on with that company for about two years, watched it grow to 140 employees, do a couple funding rounds. And I was going, "Man, this doesn't seem like it's that difficult. These guys are doing it really well and if I did it half as well or a 10th as well, that would be great."

(01:43):
And so Trevor started pitching me on this idea for us to jump into the solar industry. And basically a year later after that, Trevor sold one of his e-commerce companies, it was like his nest egg and called me and said, "Hey, I'm really serious. I actually just sold..." Transparent Labs, was the name of his company and he was ready to dive into solar. And so I ended up leaving that tech company and both of us not knowing anything about solar, were thinking through the lens of, okay, if door knockers are getting paid five or 6,000 bucks every time that they are getting a system installed and if we can do that cheaper via e-commerce and Facebook and Google, whatever type of marketing advertising, then we're going to have a more efficient business model. And so originally we thought, well why don't we do DIY kits because that is a very e-commerce friendly way of doing things, you don't need an install network and all these things.

(02:42):
And we're like, "Well let's see if DIY works." And so he had had a guy knock on his door for I think 45 grand or something, offer him a 10 kilowatt system. And Trevor was like, "I don't know if this is a good deal or not, is this expensive or cheap?" And so we ended up just jumping on his roof and doing that full 10 kilowatt install and I think we installed it for 10 or 12 grand or something like that just in the equipment costs. And so Trevor was losing his mind, he's the e-commerce guru and he was going, "Dude, we could blow this out of the water. If I have a thousand bucks to go acquire a customer, that is a ton of money, we should be able to make this work." So yeah, we initially thought, "Well why don't we create this DIY model because it's e-commerce friendly."

(03:30):
And then when we launched in February of 2021, at first it's crickets and you're nervous and we've spent a couple thousand bucks or whatever and we started looking at our pipeline and changing up our pipeline and trying different things. And really now it's funny because we've probably been through 300 iterations of different types of pipelines and landing pages and whatever it may be. And finally figured out how to create a funnel that works really well. So yeah, I think in our second or third month we had about 200 customers who were checking out, paying us money saying, "Hey, we want to go solar through you guys."

(04:12):
And at that point it was no longer DIY, we realized, hey, a lot of these people want full install. And so I was just cold calling installers all the time. We'd get checkouts in Texas or in Florida or in California and then I'd just be reaching out. And now we have... The phones have turned and as we've started to advertise in the solar market now we have a list of hundreds of installers we have called us and said, "Hey, we want to install for you." And so now we're pulling from that list and that's what Project Solar is today. People check out and we are either facilitating DIY that we still offer that option, but mainly we're doing full service install.

Dave Anderson (04:52):
Wow. So we have to talk about being a high school English teacher. So that's a pretty big... It's a long way away from doing solar. So how long did you teach high school English?

Matt Smith (05:04):
For three years.

Dave Anderson (05:05):
Three years. And how long has it been since you were actually in the classroom?

Matt Smith (05:09):
Yeah, 2018 is when I left. And so what are we four years now? And I'll probably get back to there. That would be the goal. Retirement doesn't sound very fun to me and so I think I'd love to be teaching when I'm 60, you know what I mean? It's so fun being in the classroom.

Dave Anderson (05:27):
I was going to ask you if you missed it. So what is it about the classroom that you miss?

Matt Smith (05:33):
As cliche as it is, its just the kids. Its so fulfilling. So I actually... I don't... I'm terrible at English. I was very strong in math, really good grades. I don't think I read one full book in high school. I just did not like to read, was a poor writer and decided while I was in college that hey, if I'm going to round off some edges here, I should probably dive into that problem head first and I'd really need to learn how to read and how to analyze. And that is how I see English and that's why it's an exciting passion for me is because I'm not like, "Hey, I want to go read books with kids." It's more I want to analyze and dig deep into problems and help them learn how to think and not necessarily learn how to think as if I'm the one who knows, but just engage with them in discussions and develop them as humans in that way.

Dave Anderson (06:28):
Yeah. So with the passion that you seemingly have for teaching generally, but then teaching English secondarily, I think you touched on it a little bit, what precisely pulled you out of the classroom and decided, hey, I need to spend some of these early years in tech?

Matt Smith (06:44):
Yeah, it was just an opportunity. I wasn't married at the time and I had a couple cousins who had gotten married and they were in their professions and so they couldn't take these entrepreneurial moves that they wanted to. And I was going, I'm spending 800 bucks a month right now, if you have 20 grand saved up, you're good for a couple of years. And so I was like, why don't I just jump and then see if that works and if not, I can just come back to teaching. And so I jumped and fortunately it worked, but that was the motivator.

Dave Anderson (07:13):
So you had a measure of success for the last handful of years at the previous tech company and apparently you fostered some good relationships in Trevor, your now business partner. And so when you guys decided to launch your business, you said you've gone through a lot of iterations. What are some of the things that didn't work that you discovered over the last year in route to getting where you are?

Matt Smith (07:36):
So many things don't work. I don't really even know where to begin with that because you can get super granular. It's like you're trying different colors, you're trying different... Our very first website that we built was just all wrong. We probably spent, I can't remember maybe 10 grand trying to get this whole thing built in every single aspect of it. We basically, we built this thing and we're staring at it, we're going, "This is crap, dang it. This is not what we want." And so I don't know if I can point to necessarily specific things, but that's been something interesting that I've learned as an entrepreneur learning from my business partner, he's a really good decision maker, he doesn't get emotional about things. And I remember that moment where he was going, "We got to scrap this and we have to completely go this other direction." Which is what our website is now, projectsolar.com and a more beautiful but straightforward, simple aesthetic. Before it was more complex and whatever it may be.

(08:43):
Yeah, there's just been so many things that we've tried, different marketing channels and throwing money here and money here. And one thing that I learned a lot in the tech company that I was with was again, how to raise money and just basically sales and learning a lot about sales. And I learned that I had a natural nag for sales. And so we raised money, which gave us the ability to try different things and not be so stressed that we had our own money that we had put in. And so that has been a huge benefit as we've iterated time and time again.

Dave Anderson (09:21):
Yeah. So you've alluded to it, but when you say raise money, I think it's worth talking a little bit more about that. So Project Solar recently raised a Series A, a pretty significant Series A frankly, so $23 million. And so how did that come about? Did you always know that it was the plan to try to get some sort of a workable MVP and then go out and find a financier to help you guys grow or did that happen more organically?

Matt Smith (09:50):
Yeah, so Trev's a bootstrapper. Like I said, he's done probably 10 companies and he's only bootstrapped. And then I had my experience at this tech company that I watched explode through the roof and all they did was raise money. When I came they were raising and then as soon as the money was in the bank, it was, okay, what does our company have to look like in order to raise again? And they would be running toward that picture of the company and then they would raise just step, after step, after step. And so what I told Trevor is, "Hey, if I'm coming onto this, that's my strength and I know how to do it. I just learned from some of the best probably in the world to be honest. And I think it would be foolish of us not to use that arm." So from the beginning, we took some money from friends and family and things like that and then that probably lasted eight months or something and then we raised again a bridge round and then we got to the Series A from there.

Dave Anderson (10:55):
Yeah. And so obviously to get a $23 million check means that you had a bunch of people that believed in you. I'm sure you had to get some no's to get to the yes as well, that's the way that all fundraising tends to go. But what was the message you think that ultimately resonated... And maybe you can talk a little bit about your financing partner as well. What was the message that ultimately resonated with them such that they decided, hey, this is the type of business we want to be partners with from a financing perspective?

Matt Smith (11:23):
Yeah. So it's interesting, the Left Lane Capital is the group that we took money from. We absolutely love them, they're young, they're ambitious, we just felt like we were sitting in the room with our homies that they're just really good guys and respectable. I think the notion that Project Solar is going to be a household brand was really what resonated with them and that's the trajectory that we're on and that's what we're planning to do is make Project Solar a household brand. And they had actually looked at investing in the company that I was previously at and they had turned it down and when they left they said, "We haven't invested in anything in Utah Valley, but we will at some point."

(12:13):
And so we connected over to that because Trevor and I had actually also invested in that tech company so we had a lot to connect over. And then as they started to talk to us and we talked to them, we're like, "Hey, this is a fit." This is a great team that's going to be able to help us to grow and they thought that we were a decent team that could help build out this vision of becoming a household brand and exactly what that looks like. We had a couple of other offers that were on the table and frankly there was one that was quite a bit higher, but we wanted the right partner in the room instead of just a little more money in the bank or more equity on the table. And so yeah, we ended up going with Left Lane.

Dave Anderson (12:53):
That's great. Yeah, I'm glad to hear that you're able to find a good partner in that regard as well. So in terms of becoming a household name, what's your strategy or why do you and they believe that you're on pace to do that?

Matt Smith (13:11):
So I always give Trevor this analogy I always tell him, "If you have two cars that are going 60 on the freeway, which one do you bet on?" And the answer to me is the car that got there faster. And so we're certainly small right now. We're not doing 10,000 installs a month or anything like that. And that's who we'd like to compare ourselves to is the Teslas and the Sunruns of the world in terms of okay, that is a goal that we should be passing in the future. Of course we have visions for growing our company as big as possible. But yeah, we've essentially grown to this point faster than any solar company that we're aware of from essentially zero to where we're at. And so with the velocity that we have, that's something that a lot of investors have been interested in. It's like whoa, you might still be small, but how fast you got here and not only how fast but with the skimpy means that we have that's been impressive to people. Remind me the second part of your question. You had asked two parts.

Dave Anderson (14:28):
No, I think it's hitting the question. The question was ultimately why is it that you guys think that you can ultimately become that household name is really what I'm trying to get to. If that's the message that ultimately resonated with the financiers that hey, we're putting money, we're backing this organization because we think they can become a household name. What is it that gives you and them the confidence that you guys are on the right path to do that? And I think you've touched on it, you've been able to grow quickly and of course that's very impressive.

(15:04):
So solar, everyone that's jumping into solar right now gets to benefit from a lot of the tailwinds in solar and it hasn't always been that way, there's been a lot of headwinds in solar as well. I've been doing this for 12 years, so I've experienced the harshest of headwinds and the most comfortable tailwinds in the journey. And from a regulatory perspective and I think just generally consumer acceptance perspective, we're certainly in a tailwinds phase right now with solar, which is exciting. Which isn't to say that it'll always be that way either. But I think those that are in solar generally agree that 3% market penetration, which is probably where we're at across the country, is really early days for solar.

Matt Smith (15:53):
Yeah, absolutely. And Dave, I think something I'd add to that. So when I was deciding if I wanted to do English teaching or business when I was going to college, I actually got into the business school and I sat down in my first class and this is one of the reasons I ended up leaving the business school, the teachers started by saying, "I just want you guys to know that if somebody's going to disrupt an industry, it won't be any of you guys. It's going to be someone who's not in the business school." And I was like, "Crap, I'm in the wrong place." From that moment for me, I knew I've just got to go become an English teacher, learn how to think really well. And then honestly that is as simple as that is, Trevor and I just do not think like people in the industry. And not saying that we're better or that that's anything, it's just different.

(16:46):
And we've had so many people... So some of the companies who have invested in us, because we've had different investors along the way have said, "Hey, we have gone down and even invested in companies that are trying to do what you're doing and they haven't been able to do it." And we've thought, "Why not? Why are people not able to?" But then we'll dive into these businesses and go, "Oh whoa, we definitely wouldn't build it that way. And we definitely wouldn't do that." And then we start to realize, oh yeah, if you've been in the industry for however long, you just think a certain way. And again, there's nothing wrong with that because obviously Dave, you've been in the industry and there are a lot of good learnings and things that you offer, but there's just a different perspective that comes from people who haven't been in the industry. And I think that's been exciting for investors, for customers, whoever it is that's looking at Project Solar.

Dave Anderson (17:36):
So Matt, what do you think some of those key differences are, if you could really highlight any of them for Project Solar?

Matt Smith (17:46):
So these aren't really secrets and some of these things also may change, but at least with where we're currently at, obviously our price is a lot different and we could charge more to be frank, but we don't want to. We're trying to give Americans the best possible product in terms of the actual solar plus the customer experience for the lowest possible costs that we can provide. That's obviously one important thing. I guess even the way that we're thinking about financing, the way that we're thinking about supply chain, the way that we're thinking about scale, like I referenced at the beginning, we've been building out an install network and doing it in a way that should allow for us to pour as much gas on the fire as we want and then it should grow as big as possible. And we're obviously not there yet, but the way that we're building things is just different.

(18:55):
We've talked to a lot of people in the industry who have said, "Okay, you're not an EPC but you're not really a dealer, what are you?" And we're like, "We're Project Solar, we're neither of those things. This has to be a new category for you." And they're going, "Okay, well then we don't know what rates to give you or we don't know how to treat you as what kind of spas we give you if all these different things are happening." And so forcing the industry to think differently. I remember sitting down with Greg Butterfield and I don't know if it's allowed for me to say his name, but...

Dave Anderson (19:27):
Sure. No, you can talk about anyone on here. Greg Butterfield, former CEO at Vivint Solar and current CEO at Lumio. Yep.

Matt Smith (19:37):
Right. And I love Greg, respect Greg, he's a good man. When we had sat down, we were meeting with his team and they were talking about we're trying to move from a sit down sale with a rep to a standup sale. And in our heads I was like "A standup? No." We're trying to move from a sit down sale to an e-commerce sale, no touch from a human being, you get online and you check out. And so trying to really push the boundaries again and that would be one example of we're just in our minds, we're like, "Why is this not happening?" It seems so clear to us that this is possible. But then we were sitting with all these solar guys and gals that were saying, "No, this is the next step." And we're going, "No, you got to break those bounds and forget that and let's work on where we should be currently." So stuff like that.

Dave Anderson (20:28):
Yeah, no, I totally get it. So a question, and obviously this is something that you've had to deal with as you're setting an expectation for your e-commerce customers that are going online and signing up for solar and then you're managing a very disparate network of installers across the country. How have you found, or what sorts of controls have you been able to put in place to ensure customers can have a good experience? So they're going to have the same website experience, but then once they've checked out, as you're very well aware, the differences in nuances from installing solar in Florida to Washington, to Massachusetts, to Illinois and so on and so on are pretty significant. So how have you been able to control the overall customer experience?

Matt Smith (21:13):
So at the beginning of this, Dave, you asked what I'm passionate about and I'm realizing I'm probably passionate about what I feel like I'm weakest at. That's probably where English came from. And right now I answered customer experience and it's because right now customer experience is the main focus because that's been the biggest struggle. And we have mapped out what the customer experience should be, but then in reality what it is is just way different. And so it kills us when customers don't have a good experience and maybe we get a one star reviewer or whatever, and of course we're trying to clean those things up. But ultimately it comes from putting fences at the top of the mountain instead of ambulances at the bottom, whatever at the top of the cliff instead of ambulances at the bottom. And just really vetting well so that you don't have installers who are going out and installing a job completely wrong and then having customers just livid and those projects that drag on forever.

(22:18):
And unfortunately we've had to learn those types of things the hard way and that's cost us a pretty penny because we certainly go back and make sure that that customer's installed correctly and fire that installer or whatever it may be. But it's been just slowly putting in the right processes so that customers have the right experience. And we have mapped out our processes with probably a thousand different actions that need to happen that are being assigned to different teams and things like that so that customers are getting the right amount of communication and the right timing that things are actually happening on time. Which again, we're still working on all those things and like I said, we're not necessarily ready to scale like crazy, but we're trying to put those things in place so that we can.

Dave Anderson (23:05):
Yeah. Have you tried to become, I know you're a national player at some level, but have you tried to be a little bit more geographical to control some of those... Well, to control some of the variables in regards to customer experience and the number of installers you have to work with?

Matt Smith (23:20):
Yeah, great question. Yeah, certainly we started out because we knew we were going to get attention and we had some Forbes article posted about us and other PR publications and things like that. And so we were going "We have to have this national presence so we can service all these different customers." But quickly realized that's the wrong approach, this is going to be a bad experience for us and for them. So I think we're installing in 26 states right now and we have shrunk that down to say, "Hey, let's really focus on the main six states that we're in, build a really strong network there in terms of installers and customers that we're getting referrals from and things like that. And then once we feel like we've really dialed it in open up." And so I, strongest hubs are really California, Arizona, Utah, Colorado, Texas, and Florida.

Dave Anderson (24:17):
Yeah. So Trevor your business partner, had fairly boldly made the claim that you could generate customers for a thousand dollars or less. Have you found that that bears itself out?

Matt Smith (24:29):
Yes. Yeah, he actually is... We're about there. So he was pretty spot on. It's funny, and you called that bull. I've realized since then that Tesla is getting customers for $0. I'm like, Tesla's not even marketing. And so if we truly are to become a household brand, I'm like, "I think the goal would be zero acquisition." It's just people saying, Dave Anderson going, "I want solar. Go to projectsolar.com and check out." Because you're aware of that. There's three people on your street who have already gotten solar from us and so that's where we would like to get but that's certainly five years down the road or whatever it may be.

Dave Anderson (25:09):
Yeah, I think your success at some levels poses a risk to other means and mechanisms for selling. Certainly not in the short run because there's so much solar to be sold, but in the long run potentially. What do you think your business risks are as you think about your business with Project Solar?

Matt Smith (25:28):
Well, first speaking... If I can first speak to your comment actually, just who Trevor and I are at our core, we just want progression in the industry. Honestly even if it's not Project Solar, of course we want to be at the forefront and doing things, but I would love to see other companies adapting at the same time. And I think we're seeing that, but where you're saying, hey, maybe other mechanisms are going away we would love for people to think creatively and iterate and do things better than us. And then we're partnering with you and saying, hey, sweet, you swim in your lane, we'll swim in ours, and let's really build this industry together.

(26:07):
We're not trying to dominate and be the only player and crush everybody. It's more like, hey, let's force people who maybe think we can just do this dinosaur age old thing forever, which right now we would call door knocking. Push the boundaries there so that they can also evolve. And again, if they come up with something better than us, that's great because we think it's time to be able to become more efficient so that we can offer solar for lower, open up the market for how many Americans can be ROI positive for solar and then continue to expand from there.

Dave Anderson (26:42):
Yea . I'll come back to my other question, but solar's stuck in an interesting place, it's somewhere in between construction and residential home services. And for the people that are selling it from an e-commerce perspective, I'm sure you're trying to liken it more to like a residential home service, comparing it to the utility company or cable or internet or a bunch of other home services that a homeowner might have. But there's a lot of people out there that still liken it too in terms of from a pain point and from an execution perspective, construction. And the truth is that they're both right, depending on where you're working to solve the problem, interestingly.

(27:21):
But one of the things that is absolutely true is that these residential home services generally require a very, very broad spectrum of marketing approaches and sales approaches. And again, since we're sitting at 3% market penetration, there's going to be a vibrant and strong new home builder opportunity for solar. There's going to be a vibrant and strong e-commerce opportunity that's frankly only just now budding, it really doesn't exist that much. There's going to be plenty of space for telemarketing, plenty of space for door to door, plenty of space for partnership. And I think that Complete Solar, we believe that at our core. And so that's one of the things that we're trying to do is help facilitate all those things.

(27:59):
And so for us to see your success is exciting for us because whenever you see the industry advancing and progressing in any one of those sectors, it's usually progressing in all of the other sectors as well. And so for us, we've never been threatened by others coming in and finding success. We genuinely believe, first of all, in the cause of trying to electrify America through solar, through a renewable energy source. But secondarily, we believe in a more responsible cleaner, more refined, more elegant, less caveman, in your words, less dinosaur way to do this. And so that's why I was really thrilled to get you on the podcast talk about this because I think you're the first company to make... Tesla probably first, but you guys secondarily to make a splash is with a true e-commerce play at solar and reaching out to customers in a different way. Which leads me to my second question, which is what do you think Project Solar's business risks are with your current approach?

Matt Smith (29:02):
Yeah, probably honestly, and I don't mean this in a boastful way or anything, but our biggest risk is probably growing too fast. We've turned off ads several times and just said, "Hey, we cannot install this many customers. We need to back off and we need to be disciplined." If our appetite gets too big, then that's definitely going to cause problems while we're going through these maturing stages. And Trevor and I have been at arms where he's like, "I want to turn up ads." And I'm going, "But there's no way we can install this many people. Our pipeline is already this full. We're not delivering the customer experience that we want." So that back and forth, and then there's been where those roles have been flipped and Trev's pushed for something and I'm not, or whatever it may be. But that could definitely hurt us.

(29:58):
Yeah, I think that's probably our biggest risk. It's nice, honestly, with the Series A that we're now in a position where we can turn to debt, whereas before it was like, your company's been around for how long and you want how much money? There's no way we're given that to you. And that was very difficult time to get through. We were funding things with our own money and that type of stuff to just get Project Solar's legs underneath it. But now that we've raised a Series A it is a little bit like, okay, we can get that, it's really go time and we can be a little less reserved in the way that we're growing. We still definitely have to be smart about it and we're very aware of, I think it's Pink Energy or I can't remember the exact name of the company, but Pink that just went un