Tesla’s Energy Flywheel: Playbook for Startups
Boyan Sabev is here again and today he will tell us all about Tesla’s Energy Flywheel, and why you need to know about if you are starting your own company. If you’ve missed his blog post on how to rank an e-commerce website successfully in Austria, take a look here.
Energy – sounds like a problem for the future not worth spending time on right now, when you are just starting your company right? Wrong.
While a growing energy bill may be something your future self will need to deal with, you are setting the foundation of your company at this very moment, and chances are that innocent and small decisions you take today will come back to haunt you in the future.
In this post, I would like to explain how you can recreate Tesla’s energy flywheel strategy, essentially a positive feedback loop, in your startup to secure the future of your company.
What is Tesla’s Energy Flywheel
A flywheel is a positive feedback loop, where the output of the system amplifies the system and is used as input, which then amplifies the system even more and creates even more input. It is an important concept to master in every facet of your business if you want to design your company for growth.
One of the most important positive feedback loops in Tesla and the core of the company is the energy flywheel.
Tesla makes cars, which reduces the need for fossil fuels and shifts it towards electricity. The company then addresses this newly increased need for electricity with solar panels. The solar panels create energy, which is stored in batteries, potentially powering more than just the car, which further decreases the need for fossil fuel energy.
Why it matters for your startup
Even in the early days of your startup, you are making decisions for the future, which will be hard to reverse later. You may be investing in a car and you may be setting up your first office space or choosing a server provider. Energy and mobility are changing at such a rapid pace that solutions you invest in today, maybe obsolete in the very near future. This is why it is important to consider what the world will look like in the next 5 to 15 years. Especially for start-ups, it is very important to avoid sunk costs.
The Energy Flywheel for Startups
You may not be in a position to save the world just yet, but there are certain decisions you are probably taking right now, which will greatly influence your future success.
Let’s start with the low-hanging fruit. When it comes to lighting for your office, automated LED should be the solution, you should consider, to future proof your company. It can be as simple as installing LED light bulbs in your existing fixtures and automating the lighting with a simple Raspberry Pi setup or it can be a full-fledged, custom solution.
Advantages of automated LED lighting:
- LED is much more reliable and durable than older solutions. LED lights typically last at least 15 years.
- On the energy side, led lighting uses about 50-80% less energy than regular lights, depending on the specific use case. Fully automated LED lights can even save 90% and more.
- Less maintenance, less energy usage, and automation mean, that you will spend less time and money on your lights and will be able to focus on your core business.
- The automation itself can further increase your savings and simultaneously increase your productivity. With automation, you can adjust your artificial light intensity and color to balance out the natural light. Studies show, that bad lighting can tank your team’s productivity by more than 30%, especially in the later hours of the day, when people are already tired.
- There are new financing solutions for LED, allowing you to use this new technology without putting money down or accessing your credit lines. You can learn more about “lighting as a service” from this Austrian company.
Mobility & Solar panels
While home offices can work for a while, you still need to be able to move freely and meet clients and investors.
Internal combustion engine cars are rapidly replaced with electric vehicles. While this whole process is going to take years, possibly decades to completion, the values of ICE cars are going to tank much sooner, while the prices for electric vehicles with full self-driving may even increase in the future, because of the better value they offer.
The most important factors for your future proof mobility strategy:
- Don’t buy ICE vehicles because their resale values can rapidly decrease in the very near future.
- If you decide to buy and lease an ICE vehicle, avoid diesel at all costs unless you like parking your car outside town and taking a cab to get to your meeting.
- Take care of your in-house charging. EVs become much more cost-efficient if you can charge them at your office, at night using reduced energy pricing or at home.
- Solar panels: EVs and solar panels go hand in hand. Our current energy grid is not designed to sustain the mass adoption of EVs, yet due to government policy and the better value of EVs, we are rapidly moving in this direction. The best you can do for the future of your company is to be as independent as possible from the public electricity grid by producing your own electricity with solar panels.
Solar panel technology has become more efficient, more durable, and much cheaper than in the past. In combination with government grants and innovative photovoltaic leasing solutions, it is possible to get a powerful installation with no money down requirements and without taking out a loan.
If you consider moving into solar panels and or electric vehicles, an energy storage solution becomes a must. Onsite batteries can become your in the house charging station and can help you keep the lights on during power outages. While power outages are not common right now, they may become a lot more common in the near future. Electric vehicle sales are increasing at an exponential pace, while governments are scrambling to balance the grid. The result may be, that for years to come, the grid as we know it may lose its reliability, and the cost for energy may increase in the short to midterm.
Another factor is that batteries will actually be able to make you money. During peak hours, when the grid is overused, utility companies will be able to access the energy stored in your batteries or even in your car in order to balance the grid. This will directly contribute to your bottom line. The batteries may end up paying for themselves.
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