Tendril 2.0: After layoffs and changes, CEO of Boulder firm looks to future [Daily Camera, Boulder, Colo.]
(Daily Camera (Boulder, CO) Via Acquire Media NewsEdge) Oct. 06--During the first half of 2013, Tendril's course of action was to right the ship.
For the closing months of the year: Continue to grow revenue, but do so in a more tempered fashion than before.
"We went through this painful exercise last year," said Adrian Tuck, chief executive officer of the Boulder-based home energy management firm. "That process -- as painful as it was -- was incredibly successful."
The company spent the closing months of last year cutting more than half its workforce and taking steps designed to "wean (itself) off venture capital."
The "Tendril 2.0" of today is profitable, slowly adding to its 75-person workforce, is projected to grow revenue by 50 percent and currently is vying for 10 new customers, Tuck said.
"We've come out on the other side demonstrably better," he said.
Tim Enwall founded Tendril Networks Inc. in 2004 with the aim of giving consumers insight to manage their energy usage and efficiency.
"We definitely saw, and I think the company still sees, the potential for our country at least -- if not the world -- to be far more efficient with how homes are managed from an electricity perspective," said Enwall, who left Tendril in May 2012 and became head of startup Revolv four months later.
Tendril grew revenue and built a name by creating software platforms that allowed utility firms to engage with their customers and allowed for end-users to monitor and manage their energy use. Tendril also developed hardware to complement the software offerings.
Investors were intrigued by the marriage of software and cleantech, and the company's potential and its performance skyrocketed when the federal government plunked billions into smart grid and solar projects.
"Tendril experienced its early growth and investments at a time when venture capitalists were putting a lot of money into home energy management plays, as part of an unprecedented
flood of venture capital into many different green technologies," Jeff St. John, a reporter who covered Tendril for research and news firm Greentech Media, wrote in an email interview with the Camera.
Being an early player in the field benefited Tendril, he said.
"Tendril also landed a large number of early pilot projects with utilities, and was one of the first in-home device makers to center its efforts around the ZigBee low-power wireless technology that ended up being chosen as the preferred smart meter-to-home communications technology for most of North America's smart meter deployments," he said.
Federal stimulus efforts resulted in a flurry of cash for the clean technology and energy sectors. As some utilities tested the waters to experiment with different technologies, Tendril and its three-pronged offering of software, hardware and services was there to pluck new customers left and right.
Tendril, at one point, juggled 54 concurrent utility projects
In early 2012, Tendril counted more than 200 employees among its ranks. The company had courted and won scores of utility customers, raked in more than $100 million in investment capital, won accolades and played host to dignitaries -- including a Colorado governor who toasted the firm for its leadership role in the state's "new energy economy."
As the year went on, however, the government's impetus for smart grid technology waned, U.S. solar firms were pressured by price cuts overseas and high-profile failures such as Solyndra caused capital to constrict.
That "land grab" strategy and working on projects that seemed to have no end-game were not long-term solutions -- especially as the once-favorable investment community vanished, Tuck said.
"In the end, our ability to sustain that was becoming very expensive from a cash perspective," Tuck said.
The impetus for Tendril's tumultuous change came on the eve of a board meeting early last year.
Tuck crunched the numbers and determined Tendril needed an additional $25 million in capital. The plan -- a continuation of Tendril's approach in recent years -- was laid out in an inch-thick document.
When Tuck went to bed, he could not sleep as concerns -- Tendril's business approach, the numbers, the state of the industry -- crystallized in his mind.
He no longer believed in the company's current direction.
The decisions facing him involved either keep throwing money at the business, sell the firm for cents on the dollar or make an attempt at a "redesign."
Tuck got up, scrapped the original plan and pulled an all-nighter in an attempt to figure out the lattermost option.
Lost in the shadows of land-grabbing and eyeing an initial public offering was maintaining an unwavering dedication to Tendril's core customer base and central mission, he said.
To save itself, Tendril needed to examine every facet of the business, strip out unnecessary processes and stick with the 15 customers that provided "sustainable" projects as opposed to the dozens of others that primarily used stimulus funds to experiment.
The company needed to exit the hardware business. When Tendril started, there were no products for the software to "talk to." But with the help of an open-source platform, Tendril now could tap into third-party technologies.
The changes would come at a big cost. Winding down projects and exiting the hardware segment would result in workers losing their jobs.
At the meeting, Tuck asked for 10 days to flesh out the plan and then led a discussion as to whether he was the right person to carry out that initiative.
"One of the investors told me, 'It feels like you've been like a kitten on the edge of a cliff. Maybe you drop off, pick yourself up and start climbing,'" Tuck said.
Through the failures, Tuck hoped to find success.
"This is stuff I knew and lost sight of, rather than didn't know," he said of his actions as CEO. "I lost sight of it and now have it back with a vengeance."
During the coming months, as Tendril downsized its workforce and parted ways with some members of the executive team, Tuck said he worked to help scores of people find jobs. The vast majority found new work quickly, he said.
"That was a great source of comfort to me," he said.
The company also shifted its business mix to a ratio of 90 percent software and 10 percent services and other products. During its massive growth spurt, Tendril's business was split evenly between hardware, software and services.
The intention was to remain "laser-focused" and build revenue organically.
By November 2012, Tendril was in the black, but three questions remained unanswered:
Would Tendril's desired customers stay?
Would the remaining employees stay?
Would the company be sunk by a negative public perception?
Looking back nearly a year later, Tuck said he is pleased with the firm's progress. Tendril maintained its core customer base, retained the "critical brain trust" and while public perception has not been uncritical, it's been fair, he said.
"I think the things that could've killed us didn't," he said.
Tendril founder Enwall, who remains an investor and adviser of the firm, said he believes Tuck's decisions were appropriate given the situation.
"You have investments associated with future revenues and when the investment market basically disappears overnight ... there's nothing you can do in the headwind of that macro environment," Enwall said.
When Enwall left the company in 2012, it was "just time" for the serial entrepreneur to move on, he said. He felt comfortable leaving Tendril in the hands of Tuck and others because of the desire to move the company away from the investment-focused plan.
Tendril's revenue growth continues to be strong, but the operational resurgence has come along at a slower, more sober pace, Tuck said.
As Tendril tried to ramp up its staffing earlier this year, hiring did not come as easy.
"I think people were wary of us," he said.
After a slow start to the year, the hiring efforts picked up in the late summer.
Tendril's efforts to land new business also gained steam.
The company is in talks with about 10 firms -- with about 20 million customers between them, Tuck said.
Greentech Media's St. John said the projections for the somewhat undefined home energy market remain "all over the map."
"I think the potential for energy management as an ancillary to home security, home automation or other things that consumers really want is the most likely way we'll see (home energy management) capabilities get into people's homes en masse," he said. "That is, unless utilities actually go forward with distributing lots of free or deeply incentivized (energy management) devices to their smart-metered customers.
"It's definitely a long game -- and, of course, what happens with energy prices will play a key role."
Tendril's move away from hardware and focus on software appears to be the most sustainable approach, but Tendril's future prospects depend on whether the Boulder firm's software fares better than that made by its competitors.
"Software, if it's going to be truly valuable, has to do something more than simply serve as the platform for telling people what their smart meter is recording in terms of energy usage," St. John said. "It has to provide some context for that, some additional value in terms of analyzing that data, making clear and actionable suggestions for what to do about it, and then, actually saving people or utilities enough money to make it worth the cost and time involved with setting the things up in the first place."
Contact Camera Business Writer Alicia Wallace at 303-473-1332 or email@example.com.
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