The tech industry has a love for moon shot ideas that are unproven but could be transformative if they work.
Alphabet’s X innovation lab is home to some of the industry’s biggest moon shots. That’s where Kathy Hannun was working when she came across a relatively untapped opportunity in the U.S.: drilling into the Earth’s crust to access thermal energy for home use.
However, the idea didn’t quite fit the definition of moon shot, given that geothermal technology already existed and was widely used in countries like Sweden. So Hannun left behind the Big Tech support that X provided and spun Dandelion Energy off in 2017.
Five years later, Hannun says, the company is growing as fast as can be. But it wasn’t initially clear that it would be the success it has become. When Hannun was weighing her options in 2016, it was long before the heat pumps that Dandelion sells to homeowners had made any dent in the HVAC market, and the climate tech market was tepid at best. The fact that Dandelion made it work despite these headwinds illustrates that everyday innovation is just as crucial to combating climate change as moon shots are. Here’s how Hannun decided to make the leap.
Hannun’s story, as told to Protocol, has been edited for clarity and brevity.
I think the X innovation lab was a very unique place. Even though I was fairly junior at that time in my career, I was given a lot of freedom to explore potential opportunities to create new technologies and new business models and apply them to meaningful problems. It allowed for a lot of creativity, and my personal interest has always been energy.
Home energy use really stood out to me. It turns out that, especially in the regions of the U.S. that use the most energy in the home, a lot of homes are still using very dirty, expensive and outdated heating fuels. I had firsthand experience with this because I grew up in New Hampshire in a house that used fuel oil. And at the same time, I learned a lot about heat pumps. The thing that's really special about geothermal heat pumps is that, because they're thermally connected to the ground and the ground doesn't really change temperature over the course of the year, they're able to deliver heating and cooling more efficiently to the home than any other type of system.
We did an analysis of how much money people could save if they hypothetically switched from these expensive fossil heating fuels to geothermal heat pumps, and it was just astronomical. So it seemed like this great opportunity where the financial interests of homeowners were very well aligned with the most environmentally friendly solution.
One of my colleagues recommended I reach out to James Quazi, who had a lot of expertise in home energy efficiency and had also worked at SolarCity during some of their greatest years of growth. So I reached out to James and hired him as a consultant to help me really understand the geothermal opportunity. James ended up joining X and then later becoming my co-founder of Dandelion.
I started to think that a spinout might be a good option when it became clear that we actually had to start installing thermal heat pumps. The work we had done on the market analysis had made it clear that New York was the best state to start this business in.
There were countless questions to answer: How do we price these? How do we market them? Where in New York should we get started? What partner should we use for installing them?
Alphabet is a very famous and very strong brand, and we recognized that we needed to be very careful doing things like drilling 500-foot holes in customers’ yards under the then-Google brand. There's just a lot of risk there. It became increasingly clear that the reality of Alphabet as an amazing company was not necessarily compatible with the need to prove out our idea on the ground.
We didn't need that much money to get started. There was probably going to be a lot of benefit to being a little bit financially constrained, because it forces you to really prioritize and focus. For all those reasons, it seemed like a startup made sense theoretically.
That said, I had a lot of personal trepidation. I did not feel like I knew how to start a business; I had only really ever professionally worked at Google, so it was a very daunting idea. I was not a person who had ever sold anything, let alone a heating and cooling system for home. I was not a homeowner. I did not have a background in HVAC. I remember the day that it dawned on me that this had to be a spinout to work. And I knew that either I would make it happen by committing to spin it out myself or else I would have to drop the idea and stay at Google, in a job I really loved.
I was so stressed that day — literally shaking with anxiety — because I knew I was going to spin it out, even though a very large part of myself really didn’t want to because I knew it would be way outside of my comfort zone. (And I was ultimately right. It ended up being just as uncomfortable and difficult and lonely at times as I thought it would be.) But it was so rare to find an opportunity like that: where it will be so meaningful to me and will help so much on these issues that I care about if it works. I wanted to be the type of person that would seize that type of opportunity.
🗣 How I Decided… 🗣
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