🔒Al Subbloie and Budderfly want to change the way your company buys energy

Al Subbloie is starting a new company. Ain’t no big thing — he’s done it before.

The company that made him famous was a pioneering telecom technology enterprise called Tangoe (he spelled it “wrong” on purpose — more distinctive). His new company likewise has a funny spelling: Budderfly. Headquartered in Shelton, the two-year-old enterprise is flying high and fast — from $417,000 in sales in 2017 to $3.5 million last year to a projected $50 million for calendar 2019. The company’s workforce is at 60 and growing.

That’s quite a growth trajectory, but $50 million is only the beginning. That’s because Al Subboie dreams big: He proclaims that he can get Budderfly to $5 billion in annual revenues within just a few years.

Of course, plenty of entrepreneurs have spent months or years dreaming up business plans with revenue projections pointed at the moon. What sets the 51-year-old Subbloie apart from the pack is his intuition for identifying emerging markets and industries — in some cases, before they’ve even emerged.

His “lead from the front” style emerged early in his career, when Subbloie created a company called Information Management Associates from whole cloth. IMA was built on developing and selling call-center and data solutions for sales, marketing, telemarketing and customer-service applications. For much of the 1990s IMA was one of Connecticut’s high-flyers in the surging technology marketplace, growing to $50 million in annual sales. But when the Internet bubble burst in 2000, IMA was forced into Chapter 11 bankruptcy.

Al Subbloie barely skipped a beat. His next startup, founded in 2001 was Tangoe. Headquartered in Orange, Tangoe pioneered an industry known as telecommunications expense management (TEM). Subbloie took the company public, and at its high-water mark Tangoe had onboarded some $30 billion in telecommunications spending for its corporate clients — keeping a healthy chunk of that cost-reduction as its vig. And as Subbloie points out, $5 billion is just one-sixth of that.

Subbloie resigned from Tangoe in May 2016, and the company was sold a year later.

(Last September the Securities & Exchange Commission charged Tangoe with employing fraudulent accounting practices from 2013 to 2015. Tangoe paid $1.5 million to settle the case. Subbloie and three other company executives agreed to pay fines — $100,000 in Subbloie’s case — without admitting or denying the charges.)

Today, with his newest venture, Subbloie is in fact building not just a company, but trailblazing a whole new industry — once again.

It’s called Energy Efficiency as a Service (EEaaS — even the acronym is spelled funny), and its playing field is the $300 billion annual U.S. energy industry. With its pathbreaking business model, Budderfly assumes responsibility for all the utility spending of its corporate clients, assumes the capital risk of installing improvements to reduce its energy consumption — and then shares in the savings.

It’s a new business model, but Subbloie is no stranger to new business models.

“The man thinks in business models,” says his longtime friend and fellow Amity High School graduate Matthew Nemerson, the onetime Connecticut Technology Council president who left his position as New Haven’s economic development administrator to join Subbloie as Budderfly’s vice president early this year. “He instinctively can figure out who will pay for something and why.”

The seed of the idea that became Budderfly extends back to Subbloie’s years running Tangoe. He thought about starting an energy business then — and even bought a URL for it, called Netclimate.

“The thing about energy that bothered me the most is that there’s no measurement infrastructure,” explains Subbloie, “other than the meter, which the utilities put there to create a bill. They didn’t put it there to measure the efficiency of what you’re trying to accomplish within any [physical] facility.

“And the core issue,” he concluded, “is this: You can’t manage what you can’t measure.”

Subbloie has a rare gift for seeing the world through the eyes of his clients — owners of companies.

“The [business owners’] No. 1 priority for energy is effective use — but the [utility/energy provider] has given you no tools for that,” Subbloie explains. “Nobody has. And how can you do energy management effectively if you can’t measure at the point of use?”

With Budderfly, Subbloie set out to fill that measurement/management vacuum with an array of tools. These include proprietary hardware (e.g., plugs, switches, relays) that employ specialized software and communicate via the Internet of Things (IoT) with a central management function.

Bringing all these tools and processes to bear, Subbloie has created “the industry’s first energy-management outsourcer.” And Al Subbloie likes finishing first.

He points around the conference room where he’s chatting to light switches on the walls and AC outlets near the floor.

“I used the existing holes — the [power] plugs,” he explains. “We combined metering and control within these devices. So when you put that plug in the same wall it acts the same way, it’s wirelessly transmitting the actual kilowatt-hour usage of whatever is plugged into that. It’s an Internet of Things (IoT) device.

“Same thing with a switch,” he adds. “There are meters in there that measure the kilowatt usage of [whatever] is connected to that switch.” That information is then transmitted and processed using “software in the cloud that manages all this. [Using that] we can almost remote-manage any facility to do anything.

“It’s what I did at Tangoe with telecom,” Subbloie says. “I said to companies, ‘I’ve got specialized software and hardware and tools and people who can do a better job than you’re doing today [managing energy expenses].’”

The Budderfly business model is based on a calculation that a five- to 10-percent energy savings to the customer is a “typical landing zone” following hardware upgrades and software installation. After those savings are a reality, Budderfly and client become business partners, sharing in the energy savings.

“Let’s say I hand you 8-percent savings upfront,” he explains. “After 25-percent savings I’ll split [the differential] 50-50 with you above that.”

One key feature of the Budderfly model is ten-year contracts with clients. That “elongated model” as he calls it affords Subbloie’s company sufficient time to make the energy-efficiency upgrades — and for the clients to realize the savings.

The most successful sales pros talk about “marrying the client” — and a decade certainly is sufficient time to ride out the rough spots after the honeymoon period ends. With characteristic confidence Subloie says he fully “expect[s] to get over 90-percent renewal in the 11th year” of contracts with his partners.

One of Budderfly’s first corporate clients is the Milford-based Subway International. In terms of per-square-foot energy consumption, restaurants are right up there — after all, they heat things up and cool them off at the same time. “They have this big [thermal] fight with energy use,” Subbloie explains.

He points out that the typical Subway location has at least 20 points of measurement for energy consumption. Using Budderfly’s proprietary hardware and cloud-based software, a Subway restaurant can roll back the energy spend by as much as a third, Subbloie estimates.

“The multi-locational space is a very lucrative opportunity,” he says. “That would include franchise chains [like Subway] and company-owned chains [e.g., McDonald’s]. Olympia Sporting Goods is a customer [company-owned chain]. The attraction of fast-food and retail clients is that they have multiple smaller stores so Budderfly “can experiment with a few units at a time” to achieve the optimum mix of hardware upgrades and load-management.

The ultimate payoff, of course, is measured in more than dollars and cents, or even in kilowatt hours — but more energy-efficient enterprises, and in the end a greener world.

“Whether you believe in climate change or not, we are exhausting all this [energy] into the air, and about 30 percent of what we’re exhausting is wasted,” Subbloie says. “So we’re all trying to [deploy] renewables — solar and wind — to solve that problem. I would rather lower it [energy consumption] by 30 percent before I solve that problem.”

It’s a big idea — but Al Subbloie’s never shied away from thinking big.

“I believe we can grow this to $5 billion in annual revenue,” he says. On the way there, “We are able to drive enough margin from that that I can attract capital from many sources, which obviously I just did [having raised some $75 million as of late July].

“This supports our three-year plan, which gets us to about $270 million in revenue by 2021,” he adds. “We’re probably around $18 million in recurring revenue right now.”

And just getting started.

“I like big things,” Al Subbloie says. “If you’re going to live life, have an impact.”