HIBT Lab! BlocPower: Donnel Baird

When Donnel Baird was a child, his parents would regularly use the oven to heat their Brooklyn apartment ⁠— a dangerous and energy-inefficient practice that’s unfortunately not unique to New York City. As an adult traveling the country with the Obama for America campaign, Donnel saw countless homes and apartments wasting power and jeopardizing resident safety because of dated infrastructure. He founded BlocPower in 2014 to address this precise problem, focusing on low-income communities so often overlooked by innovative startups. This week on How I Built This Lab, Donnel talks with Guy about BlocPower’s work to modernize buildings nationwide and transition them to clean energy sources. BlocPower has raised more than $100 million from Wall Street and Silicon Valley investors, and has partnered with cities across the country to create greener, safer spaces for their residents. See Privacy Policy at https://art19.com/privacy and California Privacy Notice at https://art19.com/privacy#do-not-sell-my-info.

Speaker names marked ? are inferred from speaking time and the show’s known hosts — they are not voice-verified.

• 0:00Guy Raz?

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• 0:46Guy Raz?

  build the prototype, analyze the market, maybe even come up with the idea, what separates the people who actually build something from everyone else? I don't have a clean answer yet, so I've been sitting with it with Claude. There's hope in hard questions. Ask yours at claude.ai/hibt. We get support from U.S. Bank. A question I love asking founders. What's the one decision you almost didn't make? The one that changed everything? Because it's never the obvious stuff. It's never, I decided to start a company. It's the small, boring, Tuesday afternoon decision you barely remember making until you realize it's the reason everything after it either worked or didn't.

• 1:32Guy Raz?

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• 2:14Guy Raz?

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• 2:58Guy Raz?

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• 3:40Guy Raz?

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• 4:23Guy Raz?

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• 5:07Guy Raz?

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• 5:12Guy Raz?

  Hello and welcome to How I Built This Lab. I'm Guy Raz. Almost a third of all the carbon emissions released by Americans each year come from buildings. Homes, apartments, offices, to keep them lit and heated or cooled. And this is a big problem. But there is a solution, which isn't as complicated as you might think. And the solution is to electrify our buildings and making sure that that electricity comes from renewable sources like wind, or solar, or hydropower, or even nuclear power. Most of our energy still comes from burning coal and gas. But advances in technology in recent years has made it possible, within our grasp,

• 5:57Guy Raz?

  to decarbonize all of our buildings and to do it quickly. About eight years ago, Danell Baird, an entrepreneur from Brooklyn, saw an opportunity to focus on decarbonizing buildings in low-income neighborhoods. Neighborhoods like the one he grew up in. He founded a company called Block Power that converts any building into a carbon-free building by electrifying it. So far, Block Power has converted more than 1,200 buildings and recently, signed a deal with the City of Ithaca, New York to electrify and decarbonize every single building in the city. Danell Baird, welcome to the show.

• 6:34Speaker 01

  Guy Raz, I just couldn't be more delighted to talk with you.

• 6:38Guy Raz?

  So you grew up in Brooklyn, parents immigrants. Tell me a little bit about where you grew up and what they did.

• 6:47Speaker 01

  So my parents immigrated from Guyana. And my dad was an engineer and my mom was a teacher and the country's economy was collapsing. And so they moved to the United States into a pretty tough neighborhood in Brooklyn, Bed-Stuy, which is where notorious B.I.G. is from. And at the time, in the early 80s, most of the buildings didn't have working heating systems. So in the winter, we and all of our neighbors, when it got super cold outside, we would open up the windows and we would turn on the oven in the kitchen and open up the oven door and use the oven to provide heat to all of our apartments all winter.

• 7:27Guy Raz?

  You just turned on the oven in your kitchen, cracked it open and...

• 7:31Speaker 01

  And you got to remember to open up the window so the carbon monoxide can flow out of the apartment. So that's how we did it.

• 7:37Guy Raz?

  Yeah. And that was just normal? That just seemed normal growing up?

• 7:41Speaker 01

  Yeah, there was like a furnace in the basement that was supposed to like burn oil or gas and provide hot water heating through radiators and/or vents, depending on what kind of building you're in. But, you know, oil and gas can be super expensive and maintaining that furnace can be super expensive. And so the landlady was like, "Look, we're going to charge you guys like $25 a week for this like one-bedroom apartment, but there's no heat. So all of the apartments are going to have to use the gas ovens in the kitchen for heat." And like, that's what we did. That's what our neighbors did. That's what my friends at school did. That's what we did.

• 8:15Guy Raz?

  I know you went on to study history and political science at Duke. But what were you sort of interested in doing? Were you interested in politics? Is that the direction you thought you'd head into?

• 8:27Speaker 01

  I was really interested in trying to improve the lives of my family. You know, we have this large immigrant family. I probably have 40 or 50 cousins. And I'd been given a lot of educational opportunity. I ended up going to an elite private school for high school and then going to Duke for undergrad. And my giant family... I was like, all right, we got Donnel through. We got to send him to Wall Street so he can make some money. And come back and pay for all of his younger cousins to go to college. And so there was this kind of community uplift component to what was the expectation. But when I got to Duke, I learned about climate change. I got really interested in black civil rights and economic justice.

• 9:10Speaker 01

  And came out of Duke extremely political and then ended up becoming a community organizer.

• 9:17Guy Raz?

  Working initially for President Obama's, then Senator Obama's presidential campaign, I think at first, right?

• 9:22Speaker 01

  Well, initially I was working with the, there's a small team of community organizers who had trained President Obama when he was a community organizer back in the South Side of Chicago. And so I did that for three years and was supervised by the same people that had trained Barack Obama. And then when he announced that he was running for president in 2007, I said goodbye to my girlfriend and friends in Brooklyn, packed up a car and drove down to South Carolina to become a senior staffer with the Obama for America campaign.

• 9:55Guy Raz?

  I mean, you grew up with not a whole lot of access to heating in your apartment. When you were doing that work in South Carolina, were you exposed to anything like that during that time?

• 10:06Speaker 01

  Yeah, that was what was so interesting, guys, when I, you know, I ended up going to like eight or nine states with the Obama presidential campaign. And there's a pattern that I saw as we would head into low income and working communities to persuade them that Barack Obama was their guy and he was going to support their interests and they should turn out. There's this persistent pattern where there's, there's just this tremendous waste of energy and neglected low and moderate in income buildings that really reminded me of where I grew up. I remember walking around outside one day and it was 20 degrees outside. And I was looking at this giant apartment building with all the windows open and I was like, ah, that's just like my three story apartment building where I grew up.

• 10:49Guy Raz?

  They're heating their houses with their oven.

• 10:51Speaker 01

  Yeah, they're heating this giant apartment building with their ovens. And so there is an inefficiency. In the energy system that I saw not only in Brooklyn, but in Cleveland and in Charlotte, on the South Carolina, Georgia border, and the Obama campaign that led me to believe that this was a persistent pattern of energy neglect or energy poverty that needed to be addressed. I didn't understand at the time that it was like a business or market opportunity, but I just saw it was like a pattern and I knew it was unhealthy, right? Because if you don't open up the windows, you're breathing in carbon monoxide and nitrogen dioxide and stuff that's very unhealthy for you and your kids. And so I knew it was an energy problem as well as a public health problem.

• 11:34Guy Raz?

  You went on to work for the US Department of Energy for a couple of years. Tell me a little about what you did during that time. This is sort of 2008 to 2011.

• 11:41Speaker 01

  Yeah, so remember there was a financial collapse and

• 11:44Guy Raz?

  Yes.

• 11:46Speaker 01

  So I was a liaison between the US Department of Energy and a bunch of labor unions and energy utility companies and Wall Street banks around a particular part of the 2009 Recovery Act. It was $6.5 billion with a B that was being invested in greening low income buildings, which of course was becoming my thing. And I was like, I want to do that. I want to go green low income buildings. And they're like, great, you can work with these labor unions and energy companies. And the labor unions had $90 billion of pension funds that they wanted to co-invest in greening buildings with $6 billion that was provided from the federal government as part of the Recovery Act.

• 12:31Guy Raz?

  Wow.

• 12:31Speaker 01

  And so the plan was we were going to create this new green buildings industry across America. We were going to retrain and rehire a million laid off construction workers to, you know, go building to building. And Secretary of Energy Chu had this vision of like an 18 wheeler Mack truck filled with organic insulation and it was just going to drive down the block and stop at every house and like pump green organic insulation into every home, into every attic to save people money. We were going to create a bunch of jobs. So like that was the vision and we were just going to have $100 billion to do this with. And guys, you might imagine, we could not quite pull it off. But it was a really compelling vision. You get to create jobs, you get to reduce

• 13:11Guy Raz?

  Yeah.

• 13:11Speaker 01

  gas emissions, you get to move off of foreign oil. Greening buildings is a pretty compelling policy goal with a lot of social and environmental and financial outcomes. And I worked on that for a few years. It didn't work out quite as well as we'd hoped. Like, other things worked, like, they loaned half a billion dollars to Tesla, they invested a ton of money in rooftop solar, and those things worked really great.

• 13:34Guy Raz?

  Yeah.

• 13:34Speaker 01

  But the idea of going building to building to green all the buildings in America, we were not able to pull that off.

• 13:40Guy Raz?

  So what I'm curious about, you're working on this federally financed project to help, quote unquote, "green" these buildings, which is to make them more energy efficient, and maybe put in solar panels and things like that. Presumably, while you're doing this, you're learning a lot about the inefficiency of buildings. Because when we think of, like, carbon emissions, we think of, you know, coal-powered energy plants, right? But buildings, I know this, buildings account for 15% of the world's CO2 emissions.

• 14:13Speaker 01

  15% of the world's CO2 emissions, 30% of the United States CO2 emissions.

• 14:20Guy Raz?

  Wow.

• 14:21Speaker 01

  And in New York City, where I am, buildings are 67%. So if you look at New York City and San Francisco, you have massive amounts of CO2 and greenhouse gas that's being emitted by buildings. And so, there just isn't a way to deal with climate change unless you green the buildings.

• 14:37Guy Raz?

  And that comes from presumably the energy used by everybody in the building. So that when they plug stuff in, or the lights, or whatever, you know, but also other things, like in a home, I guess, your washing machine, your dryer, your gas oven and stove top. Are all those the factors that add up to 30% of carbon emissions?

• 14:54Speaker 01

  That's right. There's all the appliances and all the electricity that we use in our buildings. And so, we burn oil and gas, or coal, in some places to produce electricity, and send it through transmission lines to use the electricity in our homes. And then, onsite, in our homes, we burn gas to cook with, to produce hot water that we shower with, and we also burn oil and gas for Heating. And so, for example, in New York City, there's 10,000 giant apartment buildings that burn oil for hot water and for heat. Like, a truck filled with oil pulls up once a week and runs this like tube into the basement, into the heating system and like pumps oil from the back of the truck into the basement.

• 15:38Speaker 01

  And then you burn that oil to produce hot water year round. And that is how apartment buildings in 2022, 10,000 of them at least, use fossil fuels. And that's on site, right? So it's a pretty significant amount of greenhouse gas emissions.

• 15:53Guy Raz?

  So this is a huge problem. You are exposed to this problem. And even these so-called energy efficient buildings or these programs that you are part of to insulate homes better and to make them more efficient and with efficient appliances. Even with those things, it's still a problem.

• 16:10Speaker 01

  It's a huge problem. Why are we digging up dead dinosaurs and burning them in our houses? This is an ancient Mesopotamia. Like, what are we doing? It's 2022.

• 16:21Guy Raz?

  Yeah. And we literally are. That's what oil is. It's just the compressed plant and animal life from millions of years ago.

• 16:28Speaker 01

  Yeah, there's a better way to do this, right? By the way, it's really dangerous. I mean, there's all the pollution that it produces, that we breathe in. But, you know, look, if you put a gas explosion alert in Google, as I do, then every week or so, you're going to get an email about some poor American family's home blowing up and exploding because the gas was leaking and someone lit a match or flipped on a light bulb. And so this is like an unsustainable, unhealthy, unsafe, and super expensive way to power buildings. And so we need to do something new.

• 17:06Guy Raz?

  All right. So you start to realize this. And it's around 2012, you decide to go to business school. Did you have a fully formed idea in mind about what you thought you might want to do?

• 17:17Speaker 01

  I did, Guy. Apparently, in my Columbia Business School application, I wrote up the argument for Block Power. And basically, it was that there seemed to be all of these challenges and opportunities in the green buildings industry that I was learning about while I was working with the Department of Energy and the labor unions. And I just couldn't figure out why we couldn't do a better job of fixing the industry. And so I would ask this question around, well, why can't Wall Street provide the capital to pay for us to green all the buildings? And the answer would be, well, Wall Street can provide all the capital. And then I'd be like, okay, why can't we train more mechanical engineers to do a better job of analyzing the buildings and figuring out what kinds

• 18:01Speaker 01

  of green equipment should go into buildings? And the answer would be like, well, nothing's stopping us from doing that. There was just no one who was focused on it, who was willing to kind of invest, I guess, their whole life and make it their mission to solve this problem at scale. And for me, because I care about climate change, and because I care about creating jobs in low-income communities like the one where I grew up, green buildings just seemed like a really important mission. And it seemed like it could just check a lot of boxes for me and be a life well-lived if I pursued figuring out how to solve the problem of greening buildings. And so in order to do that, I needed to get an MBA, to at least learn enough about business. And so that was the school I applied to.

• 18:43Speaker 01

  And I did have an explicit mission of trying to figure out how to build a nonprofit called Block Power or something similar.

• 18:52Guy Raz?

  So, people who have solar panels and all of these things that enable them to live in a less carbon-polluting way tend to be higher-income people. You essentially said, look, there are tens of millions of people who live in low-income buildings, not only in the US but around the world, and they should also have the opportunity to live in a green building. And that was, from the get-go, that would be your focus?

• 19:19Speaker 01

  From the get-go, that was my focus. I wanted to engage with the communities that I grew up in and grew up near and served. To green their buildings. I mean, when I was working with the Obama folks, I had one of my favorite pastors in Bed-Stuy call me and he goes, hey, you're working on greening buildings, right? I'm like, yeah. He's like, I'm spending $10,000 a month on my energy bill. And I'm like, what?

• 19:41Guy Raz?

  Wow.

• 19:41Speaker 01

  So he had 150 year old formerly Catholic building and he had a school for neighborhood kids, like elementary school. And then he had senior activities and lunches. So the church was like constantly filled seven days a week. And so the heating system and air conditioning system was always on, right? So he's spending $10,000 a month on his energy costs. And he goes, I only have $300,000 a year of revenue coming into the church and $120,000 of that is going out on energy.

• 20:12Guy Raz?

  Wow.

• 20:13Speaker 01

  So it's a massive pain point for low income people, right? So the other part of it is like, you know, when I was growing up in Brooklyn, man, there's like two kinds of waste that I saw when I was growing up and when I was a community organizer. There's like a waste of all of the energy and the fossil fuel gets just wasteful, right? When you look at it as someone who cares about climate, or just someone who cares about efficiency, like, why are you heating a building to 90 degrees when it's 20 degrees outside and doing that with gas ovens? And then all of the heat is floating out the window. It's absurd. And then the other waste is the waste of human potential. When you walk around these neighborhoods and you see scores of unemployed young people who have children that they need to provide for, and they have talent and they have genius

• 20:58Speaker 01

  and they have dreams, but they don't have any opportunity. And it's like, you can address both pieces of this waste by training those young people to go and green those buildings and just make everything much more efficient. And so that's what I wanted to do.

• 21:14Guy Raz?

  We're gonna take a very short break. We'll be back with more from Donnel Baird of Black Power in just a moment. Stay with us. You're listening to How I Built This Lab.

• 21:25Guy Raz?

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• 22:52Guy Raz?

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• 23:37Guy Raz?

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• 25:05Guy Raz?

  Welcome back to How I Built This Lab. I'm Guy Raz. My guest is Danell Baird, founder of Black Power. So you literally founded this company while you were at business school, right?

• 25:16Speaker 01

  Yes.

• 25:17Guy Raz?

  And you launched it formally in 2014, but not as a nonprofit, as a for-profit business?

• 25:23Speaker 01

  Correct. I learned enough about business in business school to say, well, look, I mean, greening buildings in America is going to cost like $5 trillion. There's 125 million buildings in America.

• 25:34Guy Raz?

  Literally, it'll cost $5 trillion.

• 25:35Speaker 01

  Literally, someone's going to have to put up $5 trillion. But there's a way to do it and make a financial return. So someone's going to make like... Point seven trillion dollars by investing five trillion dollars. So someone's going to make like huge fortunes, right?

• 25:49Guy Raz?

  Wow.

• 25:50Speaker 01

  By investing and greening all the buildings and like, that's why we work with Goldman Sachs, right? It's not like, I mean, they are nice people, or at least the part of the bank that we work with are nice people, but they're going to make a lot of money if this all works out.

• 26:01Guy Raz?

  But you started this as a for-profit business because you wanted to attract capital and you wanted to show that there was a business model in basically converting low-income apartment buildings into not just energy efficient, but carbon-free buildings with solar panels. And the idea was you could actually do this and it can make money.

• 26:24Speaker 01

  We thought that we could go into the poorest neighborhoods in America and build a business, making those buildings greener, smarter and healthier, and make our investors a ton of money. That's what we thought and that's what we've been trying to prove.

• 26:36Guy Raz?

  All right, so you've got the concept and you know what you want to do. Now, help me understand what that is, because this is not what the Obama administration was doing when you were trying to green buildings or make them more efficient. It wasn't about pumping better insulation to the building. You had a very different plan, which was to take a building and to do what with it?

• 26:57Speaker 01

  We want to decarbonize the building.

• 26:59Guy Raz?

  And how do you basically do that?

• 27:01Speaker 01

  There's a set of new hardware that allows us to make buildings all-electric. In the same way that Tesla and Rivian can take an automobile and rip out the fossil fuel engine and replace it with an all-electric engine, we can now do the same thing with hardware in buildings. And so we can go into basically any building in America and rip out the existing fossil fuel equipment that heats the building, heats the hot water for cooking and showering. We can rip all of that fossil fuel equipment out and replace it with equipment that only uses electricity. And actually reduces greenhouse gas emissions by as high as 70%. And so then the next question is like, okay, well, if it's using electricity, is that electricity sourced from like burning coal or gas?

• 27:47Speaker 01

  Well, sometimes, but you can also source that electricity from solar on the roof of that building, or a solar farm, or a wind farm, or a hydroelectric project. And so by converting the building to 100% all electric equipment, you create the opportunity to fully remove fossil fuel consumption in that building. So that's, that's what we do.

• 28:07Guy Raz?

  Let's get granular for a moment. And let's just take a, let's say a 10-story apartment complex in Bed-Stuy. And it's an old building built in the late 60s, early 70s, not super well insulated, not super efficient, but you want to convert that building. You can essentially put enough solar panels on the roof of that building to power that building? Or would it require other sources of energy as well?

• 28:33Speaker 01

  If it was a building in like downtown Cleveland, you could put enough solar on the roof. But because New York is so dense, the roofs in New York aren't big enough to like provide enough power to the tall buildings. What we do have in New York City is we get most of our electricity, or will next year, from a hydroelectric project in Quebec. And so there's this giant dam in Quebec that spends a bunch of turbines and produces clean electricity and sends that electricity down to New York City. And so the source of our electricity in New York is going to be far, far cleaner than it is right now, and than it is in most places in the country. And so

• 29:12Guy Raz?

  So you can convert that building to that power source in Quebec, for example?

• 29:16Speaker 01

  Exactly. So that 10-story building may be burning oil or burning gas right now for heating and cooling and hot water and for cooking. So we rip out all of that fossil fuel equipment, replace it with all the electric, we electrify everything in the building.

• 29:31Guy Raz?

  The fundamental core of this is it has to first be electrified. The building, you got to remove gas and oil, and then you focus on the source of that electricity. Is it going to be wind, solar, hydro, et cetera?

• 29:43Speaker 01

  Exactly. We electrify that building.

• 29:45Guy Raz?

  So you got to get electrified first. Okay, so that's a first challenge. And then Let's say you talk about a 10-story building with, I don't know, seven or eight units per floor. Are you going into each unit and replacing the stove tops, putting in electric ovens and so on, so forth?

• 30:01Speaker 01

  Yes, sir. We're going into each unit. We're putting in all-electric induction stoves that use electricity to cook on the stove top and use electricity to bake. And then in certain kinds of projects, we're going to put in a small modular air-conditioner-sized heating and cooling system so that that apartment building can control its own comfort with a local in-unit electric heat pump.

• 30:28Guy Raz?

  Basically, replacing an in-unit air conditioning that might be hanging out.

• 30:33Speaker 01

  Radiator or air conditioner. That's right.

• 30:36Guy Raz?

  And the heat pump is electric-powered and they're still relatively new in the US for sure. And they basically work by sucking out warm air in the summertime from the house and by pumping in warm air into the house in the winter?

• 30:51Speaker 01

  Yeah, so it's a cool piece of technology. Even if it's cold outside, there's some amount of warm air that's embedded in outdoor air, even if it's below freezing. And so they're going to find that warm air and suck it into the system, run it across a refrigerant line and a compressor, and then pump that condensed heat into your home. And then in the summer, it reverses itself and sucks in the warm air that's inside your apartment, runs it across the refrigerant line, and pumps it outside. So it's like an air conditioner that can go forwards and backwards to pump heat where it's needed.

• 31:26Guy Raz?

  And they're just as effective as a gas-powered air conditioner. Like even if it's super hot outside, like 105 degrees, it can still bring in cool air, like really cool air?

• 31:37Speaker 01

  That's right. Whether it's 105 degrees or whether it's five degrees below zero, they are able to function.

• 31:42Guy Raz?

  And it's not cooled by Freon or the same chemicals that cool?

• 31:46Speaker 01

  No, no. They have refrigerants. One of the cool things that we're really excited about is they're actually using CO2 as a refrigerant. So now if you take a step back, right, and you look at our climate challenge of like, Oh my God, what's going to happen when we put 100 million air conditioning units in India and China as middle class folks like buy houses and build houses and want air conditioning, right? To stay cool? Well, if CO2 is the refrigerant that we're going to be using, in effect, we're putting a price on carbon, right? Because we're using that CO2 as air conditioning.

• 32:20Speaker 01

  So I, one of the things that I'm really excited about and really hopeful about is if Mitsubishi and Daekan and Fujitsu and the giant heat pump manufacturers are able to crack the code on CO2 refrigerant globally at scale. This is one of the most important things that can happen because then we're going to start to power buildings with CO2. And that's, that's just going to be huge.

• 32:41Guy Raz?

  So now you have this clear idea of what you wanted to do, and you've already done some of it at this point, but this is back in 2014. And you start to attract some investments.

• 32:52Speaker 01

  Uh, attract is strong, guy, strong.

• 32:54Guy Raz?

  Attract is strong, but it's, I know it took a while, it took a while. But today you've attracted, I think, over $60 million in investments. Let's kind of break this down.

• 33:03Speaker 01

  Yeah.

• 33:04Guy Raz?

  If you go, right, to Goldman Sachs's headquarters and you say, I want to electrify this building, they're just going to write you a check. If you go to a, you know, not even a low income building, even a, you know, a family that has some money, it is very expensive to do it now. Like, for example, if you want to put solar panels on your home, it's not cheap to do it.

• 33:26Speaker 01

  That's right.

• 33:27Guy Raz?

  And buying an induction stove is not cheap, it's expensive.

• 33:31Speaker 01

  That's right.

• 33:32Guy Raz?

  Heat pumps are not a huge expense compared to what already exists in the market, but just to do it, it's a lot.

• 33:39Speaker 01

  Yeah, you might spend $100,000 to electrify.

• 33:41Guy Raz?

  Yeah.

• 33:42Speaker 01

  The average American's home.

• 33:43Guy Raz?

  Right.

• 33:44Speaker 01

  That's right.

• 33:44Guy Raz?

  So how do you do it in a building where, you know, residents are already struggling to pay their, their utility bills?

• 33:52Speaker 01

  Well, it took us about five years to figure this out, but what we've done is created a new financial product where, let's say, we're going to spend $100,000 to electrify a home. What we're going to do is calculate the size and the cost of the equipment that we're going to use to electrify the building, the cost of removing the fossil fuel equipment, the cost of that conversion, the labor costs, right? The cost of paying the well-trained certified contractor to come to your home and physically remove the equipment, put it in the back of the pickup truck, drive it, demolish it, install the new equipment. All in, that's going to be $100,000, right?

• 34:27Guy Raz?

  Yeah.

• 34:28Speaker 01

  When we electrify your home, we think we're going to save you 20, 40, 60% on your annual energy bill because the modern all-electric equipment that we're putting in is so much more efficient than the wasteful, unhealthy fossil fuel equipment that's currently in your home. So the question then becomes, how can we stretch out that $100,000 cost over seven years, or 10 years, or 15 years, so that the cost of repaying that $100,000 project is less than the amount that you're saving by shifting from fossil fuels to clean energy?

• 35:08Guy Raz?

  How do you make the case to the people in that building? Do you appeal to their sense of civic duty, or their personal health, or the long-term cost savings? How do you make the case that people in the building should go through the, you know, it's inconvenient period of getting things converted and swapped out, and construction workers, and then maybe some costs associated? What do you say?

• 35:37Speaker 01

  We say this project is going to be a pain in the butt, it's going to be a little bit of a hassle, but it's going to be worth it because we're going to save you money, and we're going to make you money. So, for example, the church pastor that I told you about in Brooklyn, who was spending $10,000 a month on his energy bill, on his oil bill, because he had a school, and senior lunch, and all these programs in his giant church that was so expensive to heat and cool. We went into that church in 2014 and figured out we could reduce his energy costs from $10,000 a month to like $7,000 a month. So we would immediately save him $36,000 a year. And we thought that in order to generate that $36,000 a year savings,

• 36:20Speaker 01

  that it would cost $25,000 of capital to pay a local construction firm to come in and reduce and, you know, reduces energy waste and improve his energy equipment. So he doesn't have $25,000 laying around, right?

• 36:34Guy Raz?

  Right.

• 36:35Speaker 01

  So we're going to lend it to him and we're going to buy the equipment, pay the contractor, supervise the contractor, complete the project, and reduce his annual energy costs from $10,000 a month to $7,000 a month. And then we're going to charge him $1,000 a month for four years, or five years, or 10 years, or however long it takes to repay the $25,000 loan that we provided. But to the pastor, he's still seeing $2,000 a month in savings, even after he repays the $25,000 loan, right? He was paying 10, now he's paying 8. And he's got a brand new, awesome, clean energy system that he feels good about. He's preserving God's creation. The millennials and Gen Z'ers in the congregation are excited about it

• 37:20Speaker 01

  because he's, you know, he's taking care of the planet. Everyone is healthier because it's, you know, you're not burning oil in the basement and breathing it in while he's preaching.

• 37:28Guy Raz?

  Yeah.

• 37:28Speaker 01

  Like, everything's better, man. And so there's all these benefits.

• 37:31Guy Raz?

  Yeah.

• 37:32Speaker 01

  That come from doing the project. And so our job is to explain to people, look, it's going to be a hassle. We're going to make it as easy as possible, but we're going to save you money. Your building's going to be healthier and it's going to be more valuable. If you were going to sell this building, now it's a green building and it's going to be worth 10, 15% more than it otherwise would be.

• 37:52Guy Raz?

  So you guys are basically doing everything from soup to nuts, right? So if a building says, yeah, we want to work with Black Power, you essentially handle the financing, you handle the contractors, the crews, the equipment, everything?

• 38:06Speaker 01

  All of it, all of it. The engineering, the design, the architects, the contractors, the equipment. We call the manufacturer, we negotiate the warranties, we do all of it. On behalf of the customer.

• 38:18Guy Raz?

  And also, I think you are also sourcing workers from communities where you're focused on too, right?

• 38:26Speaker 01

  100%. We have got a really cool project in New York with Mayor Eric Adams. We're hiring 1,500 people from the low-income communities where I grew up and where I was a community organizer in New York City. And we're training them on how to electrify buildings. And we're paying them 20 to 40 bucks an hour and putting them to work to decarbonize buildings in New York City to install heat pumps and solar panels. And so we've got 1,500 of these workers. Guy, we had a whole street gang that was like out dealing drugs a few months ago. And there's like 50 of them. And they came to us and they said, look, we're willing to shut down the gang. If you guys are willing to train us and get us certified and get us jobs electrifying

• 39:09Speaker 01

  buildings where we can make 70 grand a year, 80 grand a year, and we don't have to run from the cops or run from the rival gangs, like we will shut down this street gang. And so we set up a training specifically for them and we shut down a whole street gang. So we're really excited to be able to start addressing this like double waste, right? The waste of human potential in these communities alongside the waste of fossil fuel energy. It's really inspiring for me after 10 years of work to be able to come full circle on that. We're thrilled about it.

• 39:35Guy Raz?

  I mean, this is a for-profit business. You must make a profit. You've got a lot of investors and that is ultimately what you will have to do.

• 39:41Speaker 01

  Yep.

• 39:41Guy Raz?

  But how about government subsidies and government grants? Could that be a source of your revenue?

• 39:48Speaker 01

  Absolutely. I mean, we, we just won a contract from the city of Ithaca, New York, where Cornell University is located.

• 39:54Guy Raz?

  Yeah.

• 39:55Speaker 01

  And we have four years to electrify every single building inside city limits.

• 40:01Guy Raz?

  Every single one?

• 40:02Speaker 01

  It's going to be the first city in the whole world to be 100% electric.

• 40:07Guy Raz?

  Wow.

• 40:08Speaker 01

  There are several cities across the United States where the mayor is just like, screw it. We're decarbonizing the city by the year 2030. And it's the law in that city. Yeah. And so they need people to come in and partner with them to actually implement and deliver. And because we have a full suite of services, we do the engineering, we do the design, we order the equipment, we finance it, we project manage everything, we measure and verify the avoided emissions. We're like a great partner for certain kinds of cities to help them figure out how to decarbonize their buildings. So we're doing that in DC and in Georgia and in San Luis Obispo and Oakland, California,

• 40:51Speaker 01

  and lots of places across the country who are headed this way, who've already passed laws that they're going to be 100% green by the year 2030. Then we're really hopeful that that's going to be successful.

• 41:02Guy Raz?

  We're going to take a quick break, but we'll be back in a moment with more from Dan Alberde of Block Power. Stay with us. You're listening to How I Built This Lab.

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• 42:19Guy Raz?

  Welcome back to How I Built This Lab. I'm Guy Raz. I'm talking with Danell Baird. He's the founder of BlocPower. All right, $100 million that you've raised, incredibly impressive. I think you've done work on more than 1,200 buildings. You've got this partnership in Isica and growing partnerships. Do you have a sense of when you get to profitability? I mean, in your mind, is it 10 years from now? Or is it faster than that?

• 42:46Speaker 01

  I think we were profitable last year.

• 42:47Guy Raz?

  Oh, wow.

• 42:48Speaker 01

  There was like a stray million dollars in there that I couldn't quite get my little grubby CEO hands on that they hid from me. And so I think we like made a million. I think we did like 18 million in revenue last year.

• 43:00Guy Raz?

  So you are already profitable?

• 43:02Speaker 01

  Yeah, but again, we have a mix of capital from Silicon Valley and Wall Street. And Silicon Valley, you don't really have to be profitable, as we're all learning.

• 43:10Guy Raz?

  Correct, right.

• 43:11Speaker 01

  But on Wall Street, you do have to be profitable, right? And so the majority of the capital that we've raised is actually from Goldman and Microsoft, and we have to repay them. And so every dollar that we take in from them has to have a plan where we can give them 4%, 5%, 6%, 7% return out of the profits that we generate. So again, our business model is to go in, use digital models and software to figure out how to profitably upgrade an individual building and to make an investment using Wall Street capital in greening and electrifying that building and saving so much on the energy bill that the building owner sees some savings and our lenders see some profit.

• 43:53Speaker 01

  And if we play our cards right, so do we and our Silicon Valley investors. Now, having said that, over the next two to five years, as we prepare to like go public and IPO, we will not be profitable. If I'm doing my job, like we will be investing in R and D and expansion, just like Uber did, right? Or Airbnb or any other tech company, because we want to take the message of electrification to every corner of the country. And so our job is to make those investments so that we can grow rapidly. And I think that that'll be the best thing for our company, and I think it'll be the best thing for the planet.

• 44:27Guy Raz?

  So the plan is to take it public?

• 44:28Speaker 01

  We got to go public. And again, why? We partner with conservative energy utility companies, with mayors, with congresspeople, with city council folks who are trying to decarbonize and electrify their city. They don't want to partner with a startup. They want to be able to like go on Google and see that you're publicly traded and you're stable and your financials are good. And, you know, if a mayor signs an agreement with us that five years from now, all his voters aren't going to kick him out of or her out of office because we went bankrupt. Right? So they want that stability and transparency and we're going to need to do that in the public markets. Absolutely.

• 45:06Guy Raz?

  Presumably there are other companies out there. I know there are other companies out there that are doing similar things to what you're doing, but your, let's say, brand, right? Your competitive advantage is you already have built the connections, particularly in low income communities where there's a huge potential to electrify tens, hundreds of thousands of houses and homes and buildings.

• 45:29Speaker 01

  Yeah. I think in Silicon Valley, and this is why we had such a hard time raising capital initially. You know, look at Tesla, like they come out with the Roadster first and it's like, I don't know, would it cost a hundred grand, 200 grand?

• 45:41Guy Raz?

  Yeah, something like that. Yeah.

• 45:42Speaker 01

  It was expensive, right? And like, most Americans can't afford that. And then as you're successful, you sell enough of those things, you invest, you buy more machines, and then now you do the sedan.

• 45:52Guy Raz?

  Then you get the Model 3. Yeah.

• 45:54Speaker 01

  Right? And so now you're charging people like 75K and then you keep investing and then you bring the cost down to 30K. Same thing with the Apple iPhone, right? We've flipped that on its head and said, we're going to start with the lowest income people first. And that allows us to be mass market first. And so that has been a painful journey, but now that we've seen a little bit of success, yeah, we do have a competitive advantage and that we can expand to be mass market before other kinds of companies that have really been focused on more affluent customers. So that's right. And look, more importantly, I think that allows us to build a political coalition of people who can access our technologies and who, you know, it's a broader range of

• 46:38Speaker 01

  people who are going to care about climate policies and maybe we can get something passed. And that's, that's what this is all about.

• 46:43Guy Raz?

  You know, I spoke to a founder of a carbon capture company on the show a couple of weeks ago and he said to me, carbon capture is going to be the, one of the biggest commodity markets in the world in 50 years.

• 46:56Speaker 01

  Yeah, it's going to be like bigger than gold and oil. That's, that's correct.

• 46:59Guy Raz?

  It's hard for us to wrap our head around that right now. And you're basically saying the same thing. What you're doing, this electrification and the market opportunity is so huge, but we just can't entirely see it yet. Politically, there are still huge challenges to overcome in the United States, right? Like, this is not a problem that a couple of Silicon Valley VCs or, you know, or some billionaire philanthropists can solve. This must be solved at scale, and it can only be solved with huge, massive federal government incentives and dollars, right?

• 47:36Speaker 01

  Correct. And so what does it look like to do that, right? And so, yes, like, it is important to have federal incentives. And we have some of those in the bipartisan infrastructure bill that was passed. Now, what's interesting, the president used the Defense Production Act, which puts us on like wartime footing to produce all-electric appliances.

• 47:59Guy Raz?

  Yes.

• 48:00Speaker 01

  And so, heat pumps and electric ovens are now going to be incentivized through this wartime Production Act to be manufactured in America at low cost. We're not going to have to ship them overseas, right? And so, the cost on these things are going to drop dramatically if this plan works. And over the next two and a half years, the Biden-Harris team will put a lot of capital out to finance companies and green infrastructure projects across America. And then what needs to happen, Guy, is those projects, we need like half of them to be successful, and then they need to share their data on their engineering,

• 48:40Speaker 01

  their construction, their design. They need to like open source and share that data globally so that Silicon Valley and Wall Street can duplicate and scale those projects. And so, with our project in Ithaca, for example, we are signing up nine other cities across America to race Ithaca to electrify all of the buildings.

• 49:07Speaker 01

  And I think we got to make it interesting and competitive for local folks, right? Like, what are the ways that we can collaborate in a scenario where we have robust federal investment? And how do we get this done even if that federal investment papers off? And then, you know, there's other countries around the world, right? Like, you know, India, they don't have robust government investment across the continent of India to get this done. And so we've got to demonstrate and explore and then share data. And that data will allow capital markets to scale and replicate solutions across the country. You know, 20 years ago, I didn't think that everyone would have an iPhone or an Android, but billions of people across the world now do.

• 49:52Speaker 01

  And so we need that kind of solution at scale. And I think it's possible. And, you know, I wouldn't be working on it otherwise. I'd go find something else to do.

• 49:59Guy Raz?

  Yeah. Danelle, I want to ask you a sort of an unsavory question because we've talked about this beautiful, incredible idea and concept and business that you've built. But of course, humans, many humans can be motivated by greed and generating wealth. And certainly in a capitalist system, that is often the case. Who and how will they make the most money off of this future green revolution?

• 50:28Speaker 01

  Who and how? And then I would say a third question is who should make the most money off of it? Right? So I think that innovation in America, from as far as I can tell, is funded by Silicon Valley venture capitalists.

• 50:40Guy Raz?

  Yes.

• 50:41Speaker 01

  They are making a ton of money. They've invested in Uber and Airbnb and all these incredible companies that have done really, really well, and they've made a ton of money. And so now, folks who normally invest in other kinds of investments, like Fidelity, they're like, oh, we got to come in and start investing in venture capital as well. And so to the extent that the climate crisis can be solved by the traditional Silicon Valley suite of solutions, meaning chiefly software, right?

• 51:12Guy Raz?

  Yep.

• 51:13Speaker 01

  And with this archetype of a founder who... From what we're being told, it's like a 19 year old Caucasian male who drops out of Stanford or Harvard, you know, like Steve Jobs, like Zuckerberg, like Bill Gates. Silicon Valley is looking to finance that kind of archetypal founder and company to solve the climate crisis. So that's one piece of it. The second piece of it is the federal government is investing billions and billions of dollars. The Biden Harris administration is providing lots of capital to small businesses and companies, just like the Obama administration, loan $500 million to Tesla and Elon Musk. There's like a ton, there's like $40 billion

• 51:54Speaker 01

  of loans that are being made to green energy companies using taxpayer dollars, which, you know, the companies will need to repay. Yeah. Then there's Wall Street. And so our partners at Goldman Sachs, for example, they have allocated $700 billion to invest in addressing the climate crisis. And I think that number's only going up. So there's trillions of dollars of capital from Wall Street and Silicon Valley and the government to invest. And they will choose a set of entrepreneurs and companies who they hope will grow and scale and expand and make a ton of money while solving the climate crisis. But I think there's a bigger question around who should,

• 52:37Speaker 01

  and you know, that's traditional capitalism and innovation in America and Silicon Valley style technology investing. And like, that's how it's going to go if left unchallenged. I think that there's another better path, though. We actually believe in a lot of crowdfunding, for example. We filed with the SEC to raise capital also from ordinary Americans. If block power does well, we want like our local rabbis and pastors and high school teachers or whatever, who invested $25 or $500 or whatever they had to buy some of our stock early on. We want them to make money alongside Goldman and our venture capitalists investors. So we filed with the SEC to create that. So that's one part.

• 53:21Speaker 01

  But that's not just like a moral or ethical thing to do, right? Like, we need more and more Americans to look in the mirror and say, if 50% of Americans are alarmed about the climate crisis, what can we do about it? Right? So, yes, we can complain and call our senators and or post on Twitter or whatever. And we can go out and buy an electric vehicle. That's great. And we can decarbonize our homes. But we need like a movement of Americans across multiple parts of society that is broader than just like a thin, you know, partnership with venture capitalists and Wall Street. Like, we need regular, working and middle-class Americans to embrace the opportunity of climate change to make money.

• 54:03Speaker 01

  And so, in our view, it wouldn't just be the entrepreneurs and the Silicon Valley tech companies and investors and Wall Street folks who would make money off of this. But all of us would co-invest in climate companies as investors, as well as customers. And I think if we could achieve that, then we would also be building the broad-based political coalition that is needed to pass climate change legislation.

• 54:30Guy Raz?

  We know this has to happen, right?

• 54:33Speaker 01

  Yes.

• 54:33Guy Raz?

  Because we need to decarbonize.

• 54:36Speaker 01

  We must.

• 54:36Guy Raz?

  And 30% in the US coming from buildings. So, most of us, our carbon footprint, for most of us on an individual basis, is basically our home and our cars, right?

• 54:45Speaker 01

  That's right.

• 54:46Guy Raz?

  And so, we can really have a huge impact on this. And it seems like there's some things that are really hard. Like, if we only sold electric cars for the entire fleet to be electric, it's gonna take a while. You're saying with this is it can happen much faster, actually, but primarily about converting the source of energy into a building, essentially electrifying a building. And it can happen pretty quick.

• 55:11Speaker 01

  We can do this in the next 10 years. I think that if we mobilize a generation of young people who are focused on this problem across the political aisle, right? Like, I've talked to young evangelical Christians who are very concerned about preserving God's creation in the face of catastrophic climate change. Like, how do we come together as a generation and say, this is a solvable problem. We have all the hardware we need. Wall Street's gonna give us all the capital we need. We have all the machine learning and digital twin technology that we need to figure this out. We have everything we need to go do this, right? And like, we can do it. It's a doable thing.

• 55:48Guy Raz?

  Dan Alber, thanks so much for joining us.

• 55:51Speaker 01

  Guy Raz, I just couldn't be more delighted to talk with you.

• 55:55Guy Raz?

  Hey, thanks so much for listening to How I Built This Lab. Please do follow us on your podcast app so you always have the latest episode downloaded. If you want to follow us on Twitter, our account is at HowIBuiltThis and mine is at GuyRaz. And on Instagram, I'm at Guy.Raz. If you want to contact the team, our email address is [email protected]. This episode was produced by Carla Estevez with editing by John Isabella. Our music was composed by Ramtin Arablouei. Our audio engineer was Neil Rouch. Our production team at How I Built This includes Alex Chung, Chris Messini, Elaine Coats, J.C. Howard, Liz Metzger, Josh Lash, Sam Paulson, Catherine Seifer, and Kerry Thompson.

• 56:40Guy Raz?

  Neva Grant is our supervising editor. Beth Donovan is our executive producer. I'm Guy Raz, and you've been listening to How I Built This.