Stephen Lake built a smart glasses company, sold it to Google, spent time inside the machine, and came out the other side looking for the next thing. The next thing turned out to be a home electrification company, starting with heat pumps.
Jetson is the result. It's a vertically integrated electrification company that designs its own heat pump, manufactures it through a contract partner, sells it directly to homeowners, installs it with its own technicians, and monitors every system it has ever put in the ground with closed-loop performance data. No distributor. No dealer. No middleman. They just raised $60 million, they're operating in six markets, and they're quoting whole-home cold climate heat pump installs at 30–50% below what the rest of the industry is charging.
If that sounds like a threat to every existing player in HVAC, it's because it is. The interesting question is whether Jetson can actually deliver on the promise — and what the industry should do if they can.
The first thing to understand about Jetson's pricing is that it isn't a loss-leader or a venture-subsidized discount. Stephen was explicit: the business works at those prices because the supply chain underneath it has been collapsed.
A heat pump from a major brand name manufacturer isn't actually made by that brand. It's made by one of a handful of OEMs that produce most of the heat pumps on the market. That OEM sells it to the brand, who rebrands it. The brand sells it to a distributor. The distributor sells it to the contractor. The contractor sells it to the homeowner. Four layers of margin stacking on the hardware alone — before you get to the hundreds of additional materials that go into an install, which Stephen says can add up to as much as the cost of the core heat pump itself.
Jetson doesn't have those layers. They design and buy direct from an OEM. They warehouse the equipment themselves. Their technicians install it in electric vans. They handle permitting and rebates in-house with their own software. The savings compound at every step.
This is the exact playbook Tesla used to reset price expectations in cars — and the parallel is worth sitting with. The incumbents in that industry didn't react fast enough.
What separates Jetson from every other company in HVAC isn't the pricing. It's the feedback loop.
Every Jetson system is fully monitored. They know the thermal model of the home. They know the weather. They know the actual measured output of the unit. They compare the predicted heat load to the actual heat loss — on every install. That closed-loop data is what allows Stephen to make claims that would sound outrageous coming from anyone else.
According to Stephen, his team has found Manual J’s consistently overstate heating loads. In their experience, Jetson's own modeling is closer to reality, and even Jetson's numbers carry significant margin above measured actual loads. Across over a thousand installs, Stephen says he can count on one hand the number of systems they've had to go back and reinstall.
This is the part of the episode that should give the entire industry pause. The HVAC industry has spent decades building deterministic protocols to produce quality outcomes — Manual J, Manual S, commissioning procedures. Jetson isn't using those protocols. They're measuring the outcome directly, at scale, and iterating based on what the data says. If their approach holds up, the conversation about what "good" looks like is about to change.
One of the most provocative technical claims in the episode was about duct work. The conventional wisdom is that heat pump retrofits often require duct work modifications because the existing system wasn't designed for the airflow a modern heat pump demands. Most contractors either ignore the issue or — if they're in the top tier — address it through modifications.
Stephen thinks both camps are solving the wrong problem. In his view, the duct work issue is almost always a downstream symptom of an upstream mistake: oversizing the heat pump. An installer sees a 60,000 BTU furnace, runs a quick Manual J, lands at a five-ton heat pump that needs a lot of airflow, and then discovers the duct work can't move that much air. But the home probably only needed a three or four-ton unit. A correctly sized heat pump has airflow requirements much closer to the furnace that was already there — and the vast majority of homes, Stephen says, have duct work that already supports a properly sized heat pump today.
Size it right. The duct problem solves itself. That's a claim with huge implications if it holds up across geographies and housing stocks.
The honest answer is that we don't yet know whether Jetson will fully deliver on everything Stephen described. We've both been inside Silicon Valley venture-backed companies where the reality didn't match the promise. Skepticism is warranted.
But if they do, the implications for every part of the HVAC value chain are real. For OEMs and brand-name manufacturers, the question is how long they can continue shipping closed systems with limited data access and antiquated software before contractors start demanding something closer to what Jetson has built. For distributors, the question is what value they're creating that justifies their place in a stack that someone just proved can be removed. For installers, the question is how you compete with a company offering 30–50% lower prices and a level of quality control you can't replicate.
And for the industry bodies that own the protocols — ACCA, NCI, and others — the question is what happens when an outside player builds something that bypasses the protocols entirely and measures the outcome directly.
Stephen's framing kept coming back to one line: Jetson isn't an HVAC company. They're not even a heat pump company. They're an electrification company — a category that barely exists today, and one they plan to expand into EV chargers, heat pump water heaters, batteries, and beyond.
This is a company to watch. And if you're in HVAC, this is a conversation to listen to twice.
[00:00] – Episode Teaser
[05:20] – What Jetson Actually Is (Not a Typical HVAC Company)
[07:28] – Stephen’s Background: From AR Startup to Climate Tech
[12:49] – The Real Problem: Cost and Friction in Buying Heat Pumps
[19:15] – The Jetson Experience: 2-Minute Quote to 1-Day Install
[23:58] – Closed-Loop Data: The Advantage Nobody Else Has
[25:09] – The Oversizing Problem (And Why Duct Issues Are Misdiagnosed)
[32:00] – Why Manual J Gets It Wrong
[44:40] – Why Jetson Is 30–50% Cheaper
[49:43] – The Bigger Mission: Electrification and Urgency
[55:54] – Industry Impact & What Comes Next
00:00:00.000 — 00:00:41.720 · Speaker 1
If we look at the massive data sets, the average whole home central ducted cool climate heat pump upgrade somewhere between 25 to $30,000, depending on the system size and their data sets are typical. Quotes are anywhere from 15 to $18,000 today, so we are substitutes before any incentives. That's a top line price so substantially below.
The difference is actually larger when you factor in incentives. Because if you think of, let's say you got a $8,000 rebate from Massachusetts, you're down to like $8,000 with us sometimes versus $22,000. So it's actually even bigger difference. So yeah, substantially lower end. And it's not. I think this is a part that we actually still struggle to communicate is it's really hard to explain sort of way cheaper and higher performing.
00:00:45.960 — 00:04:56.340 · Speaker 2
Everyone. We've got a really good one for you today. I'm going to start with a trigger warning. If you're an HVAC, this one might get you a little activated. I think it's the most interesting and thought provoking conversation we've had in maybe ever. So I want to just set it up properly. Our guest is Stephen Lake, the CEO of Jetson.
Jetson is a vertically integrated company that designs its own heat pump contracts to manufacture it, then distributes it, installs it with its own technicians, monitors it with its own software, and fine tunes it remotely, all while going direct to homeowner for their sales model. No distributor, no dealer, no middleman at all.
And they're quoting hole home cold climate heat pump installs at 30 to 50% below competitive rates for a job in Massachusetts that would typically cost something like 25 to 30. K Jetson is quoting 15 to 18 K, and they claim from data with over 1000 installs that their systems are performing as well or better than the status quo.
All right, here's why this episode matters, depending on where you sit in the HVAC world. If you're an industry body that owns protocols and standards that are supposed to lead to high quality installs, something like Acca or NCI, Jetson is quietly undermining your position. They're not ignoring those protocols because they don't care about quality.
They're bypassing them because they've built something that replaces the function. Those protocols serve closed loop performance data on every system they install. So instead of relying on a standardized procedure to produce a quality outcome, they're measuring the outcome directly across thousands of homes.
It's the difference between forecasted performance versus actual performance. If you're a major manufacturer, listen to the automated commissioning, the real time system, monitoring, the glorious homeowner facing software and controls, and the proactive remote adjustments Jetson has enabled.
Their technicians aren't guessing. Their software is watching every system every hour. The more the status quo industry closes down, data ships antiquated, clunky software, makes controls harder to use. The more the status quo is going to feel like a different planet from what Jetson is doing. If you're a distributor and your position in the value chain is contributing to that 30 to 50% price premium for homeowners.
You need to be asking hard questions about what value you're creating that warrants that market, because Jetson may be proving that you can remove it with no hit to quality. If you're an installer, you're going to want automated commissioning with instant feedback. You're going to want easy access to ongoing performance data so that you can proactively improve comfort for your homeowners without them even telling you something's wrong and without rolling a truck.
And if you're in a market competing with Jetson, how do you compete with 30 to 50% lower prices end this level of quality control? This isn't private equity rolling up shops, raising prices and degrading service that's easy to compete with. This is the opposite. Now, I say all this with a healthy dose of skepticism.
I have personally worked inside multiple Silicon Valley startups and unfortunately, my experience they were all sizzle. No steak. The reality did not match the hype, but maybe I just chose wrong because once in a while, Silicon Valley produces a company that shatters the status quo and changes the way a lot of us live our lives by being vertically integrated.
Tesla created an absolutely glorious product that changed the way the entire auto industry thinks. And if Jetson can actually do what Stephen laid out in this conversation, Jetson might be the most consequential business operating in HVAC today. On that, he didn't even position Jetson as an HVAC company.
He positioned them as an electrification business, a category that barely exists today. We just scratched the surface of where Jetson wants to go and what that means. All right. Suffice to say, after all that preamble, I think this is a company to watch. I think it's a super interesting episode. Enjoy the conversation.
One very quick plug. If you want to compete with companies like Jetson, you're going to need to do it based on trust and an extremely high level of quality. We have put together our trust checklist that walks through what it looks like to compete on trust rather than price. The link to that is in the show notes.
All right, let's get into this episode.
00:05:00.140 — 00:05:02.700 · Speaker 2
Hi, and welcome to the Heat Pump Podcast. I'm Ed Smith.
00:05:02.700 — 00:05:05.260 · Speaker 3
And I'm Eric Fitz. We are co-founders of Amply Energy.
00:05:05.300 — 00:05:16.940 · Speaker 2
Today we have Stephen Lake, co-founder of Jetson, which I mean, Stephen, I've been after you for like at least six months to get on this podcast. So we are very excited to have you here. Welcome.
00:05:16.980 — 00:05:20.700 · Speaker 1
Yeah, thanks for having me guys. Excited to be on and chat. Been following the podcast for a while.
00:05:20.700 — 00:05:33.300 · Speaker 2
So you're very different kind of company than we've had on this podcast in the past. So would you give us like the two minute summary of what Jetson is, just so our listeners have a bit of an understanding before we double back and dig deeper?
00:05:33.340 — 00:06:12.770 · Speaker 1
Sure. Jetsons home electrification company that is focused on making it easier and less expensive for homeowners to get off of fossil fuels and convert their homes to modern all electric systems. We're a little different. And then we do that in a fully vertically integrated way that we sell our own equipment directly to our customers, install it ourselves, service those systems, monitor them, etc. all in service of really making it a much simpler and lower cost option for our customers to make that switch.
And at the end of the day, Jetson is focused on the same problem that I think many of us in the industry are focused on today, which is how do we get more homes off of burning fossil fuels and upgraded to modern, more efficient electric systems.
00:06:12.770 — 00:06:24.650 · Speaker 2
And we're going to dig more into that. But just to tack on to that summary. So you're like an OEM, a distributor and HVAC company, at least right now while you're doing focus on the heat pumps all in one. Yeah, yeah.
00:06:24.650 — 00:07:24.130 · Speaker 1
That in a few more things. We have a significant software and technology stack behind our product. And so I think you can think of the sort of first generation of heat pumps we saw go into homes be more along the early days of EVs. If we think of today where we are in the consumer market for electric vehicles, the transition wasn't like take a gas car and Chevrolet or like GM or Ford just took out the gas motor and put an electric motor in and called it a day.
We had new companies that came in with both the electrified the drivetrain of the car. They also made the product a much different product by using modern technology and software to enable it. We're taking a similar approach to the home and heat pumps and saying at the same time as we go and upgrade these homes off of fossil fuels, let's modernize the experience for that homeowner.
Let's make the homes higher performing. Let's use the technology available today to make that system smarter as well. And so that's another part of what we do is not just the basic heat pump replacements. How do we do that, but also over time, make that home a better experience, a more efficient home for the homeowner.
So we have a big software component as well that we'll talk about.
00:07:24.170 — 00:07:42.970 · Speaker 2
Cool. All right. Very exciting. I want to get more into all of that. But tell us more about you for a second. Like you built a company called North, you sold it to Google. You spent time inside Google. Like, who's Stephen Lake? Tell us about your career and life arc that led you to found a company like Jetson?
00:07:43.010 — 00:09:45.680 · Speaker 1
Sure. Yeah. I mean, Jetson is a bit of a orthogonal journey for sure. My background on paper is from a very different industry. I'm not an HVAC operator, didn't come from the industry, started Jetson out of a very different set of experiences, and that's influenced how we're building the company today, I guess putting how far we want to go back.
Like, I've been interested in building things my whole life, pretty much. That was like hands on building robots and dune buggies and all sorts of things and like taking apart electronics when I was a kid, kind of like just the very typical engineering story of like building stuff as a kid that kind of transitioned to building companies at some point.
So my first business when I was in like, I don't even know, grade 5 or 6 or something like that, I used to at the time have these like hobby RC cars and trucks that I would like screw around with as a kid. And at one point I had built an LED lighting system for one I had this is back before LEDs were really a thing. And like these cars used to literally have like incandescent lights on them that would like break and things like that.
So I like bought some LEDs, solder together a little lighting system, and then like before I knew it, I had like set up an e-commerce store and I was importing all the components from China to my parent's house, and they were paying the duty charges and getting angry when I got home from school and there was like five new boxes of resistors or whatever coming in and ended up like this sort of small business selling parts for these cars.
So lighting systems that I could have moved on to other parts as well. I did that for a while. I also had like a DJ entertainment company through middle school and high school where I was doing like event production and corporate events and weddings and all sorts of stuff on the side. So I kind of was always like entrepreneurial in a sense, just kind of building things.
I went to school for engineering, did a bunch of work through school in various industries, but knew like when I graduated, I was going to work for one of those companies, didn't apply to any jobs after graduation, and started my last company North effectively the day we graduated from undergrad with a couple classmates of mine, and then spent the better part of ten years or so building that business, which was in a completely different space than HVAC.
So North was originally called Thalamic Labs. Our first product was EMG interface for computers. And so if you got one sitting back here somewhere? Um,
00:09:47.000 — 00:10:31.920 · Speaker 1
we got this, like, armband product called Myo that basically would pick up the electrical signals from the muscles in your forearm and detect all the hand gestures and motions you were making and then wirelessly connect to computers. And we initially designed it for basically VR and AR headsets to like, get your hands sort of the mouse of AR and VR to get your hands into that virtual world.
So that was like a deep tech company. We were inventing new sensor technology. We built our own manufacturing plant. Eventually we moved on from the sort of armband interface. We rebranded the company as North and really produced the first pair of consumer augmented reality glasses that were prescription glasses with a direct retinal projection display technology inside.
What do you know some of those here.
00:10:33.560 — 00:10:34.880 · Speaker 1
So these were like.
00:10:34.960 — 00:10:35.920 · Speaker 2
This is awesome.
00:10:36.000 — 00:12:49.380 · Speaker 1
Yeah, literally like glasses that were directly projecting pixels on your retina. So again, like super deep tech company, I think we had 100 PhDs that we moved in from all over the world to work on this, doing like fundamental material science. New holography techniques, new manufacturing techniques, all of the UI and software and interface.
Like what is this new version of computing look like? We opened retail stores to actually sell these glasses in New York. In Toronto, we had pop ups across the West Coast. That company was about 500 people at peak, and we were sort of just getting ready to launch the V2 consumer version of that product. When we ultimately decided to sell the business to Google back in 2020.
And so that product and team became Google's Corvette for augmented reality and much of that still today working on it. But it's going to post that deal and acquisition. The founder, other founders, which are two classmates of mine and myself, had really wanted to focus on climate and how we could sort of apply our skill set to have an impact on the energy transition for our next business.
Yeah, long story short, we were at Google post-sale. We're looking at a whole bunch of opportunities within climate. We knew we wanted to do something and just kept coming back to where sort of the biggest buckets of emissions and energy use that we could have an impact on, and how does it overlap with our own interests and passions and so on.
And the home was just this topic that kept coming up, right. The home is like 22% of net energy use in the US. So one of the biggest single line items of energy, most homeowners don't realize their home emits about as much carbon as the car in the driveway, if not more. So just a huge source of emissions and way further behind on the, I'd say, adoption curve of being electrified.
And so, yeah, that's sort of led to the Jetsons story and decided to do something very different. Get into HVAC and home services, had a background in our building things with interest in architecture. Built several houses in DIY heat pumps. Like years before myself, my wife runs a company that's in construction software.
It's going to have been adjacent to like construction and building, but never operated an HVAC business by any means. And we kind of dived in like a bit intentionally naive to how things were done and, and really went back to the sort of fundamentals and asking all the questions, really, how could we increase adoption for homeowners.
How can we make this an obvious yes for anyone replacing their old furnace today to choose an electric system versus another gas system, and have kind of built the whole strategy around that idea.
00:12:49.420 — 00:13:05.420 · Speaker 3
So Stephen, this was great. You started to get into the question I really wanted to ask. You mentioned you came at it from sort of this naive angle. What was it kind of doing that approach that you learned discovered, that kind of led you to do what you're doing right now?
00:13:05.460 — 00:18:33.920 · Speaker 1
Yeah, there's been a bunch of attempts at different approaches. And so we have our view on kind of what is required and is going to work in the industry. Obviously, others have different perspectives on it. Right. And so I think we had some existing data points we had seen and approaches other companies had taken that it had yielded some results, but still had to move the needle, in our view, enough on adoption.
And the first principles we kept coming back to is just if I'm a homeowner today, like what has to be true to make the heat pump the obvious choice for me and the two big things we always came back to were one, you've got to solve the economics. Your average whole home central coal climate heat pump system is somewhere from 25 to $30,000 today, versus roughly 15,000 for an AC plus a high efficiency furnace.
So you're like almost double the cost. So off the bat, you're going to eliminate, like vast majority of homeowners that just can't choose to spend an extra ten plus thousand dollars on the sort of green option. So the green premium was just really big. That's basically the first criteria you've got to solve that.
Second criteria was that it feels today like that process is a lot higher friction than it should be. And as a for a new consumer product to be adopted, I think price point and cost is really important. And then friction is really important. So effectively we need to remove the friction, remove the cost on it.
And so as we evaluate it, all of the different approaches and models and strategies we could take to try and move the needle on adoption, that was the filter we used was just could we get to being cost competitive or below legacy fossil fuel systems, and could we make the process much more what we expect in other parts of our lives?
As consumers, we think about today buying a car from a Rivian or a Tesla. It's not like buying a car from that Ford dealership, right? You're not like going through this kind of old school, like haggle over a price that's not very transparent, like get sold on something. It's you go online and you look at the features, it's all presented in front of you.
You buy the product on your phone super easy, or you buy a product on Amazon today. And so that's what we expect for the rest of our kind of consumer purchases today. Home services and a new heating system is just so far from that. In general, it's going through a more traditional process, usually an in-home sales process where you've got to schedule a time for them to come into your home.
There's a lack of transparency. Often you're not sure if you're kind of getting ripped off on something. The price is being made up based on the car in the driveway. You don't have good transparency onto it. Once you get through that, you kind of go through this like very technical sales process. Do you want the good bet or best?
Do I want the like brand, a x Platinum Plus option or like this other one? That's probably the same, but I don't really know. And then you get through that and then you have to go through like permitting rebate programs. What applies to this system? Does my ix35 platinum meet this rebate? Like how do I get the right permits?
How do I get this done properly? It's just like a it's a complicated process, and it feels more like a construction process or like a home rental than a consumer purchase. So a big part of our approach is how do we just make that far more transparent, easier for homeowners, make this something where it's just like other products you buy as a consumer, you can do this online, you can get transparency on the pricing.
We can make it as easy as possible. I think we've come a long way there and we'll continue to go further on. Just how do we remove friction from that process and make it? I think just any friction you can remove, any cost you can remove is going to increase the adoption you get in every home we get that picks that electric system.
It's 15 more years of that home being much lower emissions. And I'm choosing the steady state. Have just put a replacement furnace in today. That's how we think about it. And kind of that really informed the model we took because as we looked at alternatives like what if we like other companies? Kind of.
We're more of like a sales layer on top. Made it easier to buy, maybe, but we work through existing contractors while you lose control of the quality and the experience and the friction is still there, it's really hard to drive the price point to where it needs to be, because you still have a lot of inefficiency that's there.
We just kind of look through that whole stack and identified, like so many areas of inefficiency, that exist at every part of the value chain. And to really get the price point to where it needs to be. We just have to work every day to drive all of those out, and they really sort of stack up. When you think about the inefficiency that happens on site when you're installing these units in traditional construction.
Our backgrounds were consumer electronics. So we think about production being like a factory where you're producing thousands of the same device and you optimize every step. You reduce waste of materials, you reduce cycle times for the steps. You think about the flow of materials, the CapEx efficiency for all of these things, and just produce a high quality, consistent experience.
And that is just really far from the usual experience in HVAC today, where it's kind of bespoke and one off where you're doing a gas furnace one day, or maybe you're doing a heat pump of one brand the next day, doing something else the next day, running back and forth to suppliers, picking up things. It's just you think about the iPhone manufacturing line with like the color coded tools or robots doing each step and how efficient that is versus the typical trades process.
It's clear there's a lot of inefficiency, and all of that inefficiency just means cost for the homeowner. Like every minute spent not installing the unit is a minute. The homeowner is paying for. It's not adding value to their home and their experience, and that goes all the way back up through the process.
It applies to the distribution and supply chain. It applies to all the back office functions that go into supporting the permitting, the system design and everything else in the process. And so we really think about it as where can we make investments that will pay off in reducing waste, in the process, reducing costs for the homeowner and increasing the quality at the same time?
Because those things are directly linked, the more you can standardize, monitor and measure these processes, improve them. It means a better install, more consistent quality for the homeowner. It means a lower cost, less waste in the process, which means more homes getting heat pumps.
00:18:33.960 — 00:18:49.280 · Speaker 3
It's amazing. It definitely resonates. Just love that you are focused on making heat pumps a no brainer for everybody. Make it a no brainer for that homeowner. Make it the easy option. Make it the option that's going to be lower cost. Higher comfort, more convenience. All the things. It's fantastic.
00:18:49.320 — 00:18:50.160 · Speaker 2
Yeah. It's awesome.
00:18:50.200 — 00:18:51.600 · Speaker 1
Yeah. That's the goal. Exactly.
00:18:51.640 — 00:19:20.600 · Speaker 2
I'm dying to dig into the cost and economics, but I'm going to bite my tongue for a second because I think the next place to go is the experience. So you painted some of the homeowner experience. That's friction full right now. If I were going to get a Jetson system installed in my house today, soup to nuts, what's my experience as a homeowner look like and feel like going through your process?
Sure.
00:19:20.640 — 00:23:25.050 · Speaker 1
Yeah, so I'll walk through it. It's pretty easy. So you start off on our website, all of our quoting is online. So it's just clear transparent pricing. You're going onto Jetson home. You'll put in your address if you're in our service area. Well, when you put in the address, we'll look up your home. So we tie into numerous databases.
We'll figure out the footprint of your home, the construction of it, the year it was built. Numerous other factors. We basically invisibly model that home in the back end so we understand more about it. We'll ask you to confirm some details on the home, such as the square footage, and if you've changed anything, better remodeled it over time.
So a couple of easy questions your current heating system will ask you. But do you have a furnace? Do you have a gas boiler or do you have vents, etc.? Do you confirm our systems compatible with the home? We then calculate any available incentives automatically, so we participate in dozens and dozens, maybe hundreds at this point of different incentive programs that are from municipal, utility, state level, etc. there's a really complicated matrix of compatibility based on where your home is located, who your utility is, your household income in many areas, etc. we automatically calculate the right questions to ask, and so we'll ask you the relevant questions.
We'll confirm what you're eligible for, and then we'll instantly present you a quote. So typically it's about two minutes in total. You have a full preliminary quote for your system that includes all of the installation of the system, all of the permitting, the heat pump. It includes us doing all the incentive applications for you directly taking care of those.
Following that preliminary quote, we asked you to submit really two photos, your main electrical panel and then your existing furnace unit or heating system. Once we see these, our team confirms the quotes. Really there. We're checking we're doing electrical load calculation for your home. We're confirming if you need a service upgrade or if we have to investigate further to look at historical loads and things like that.
We're evaluating your system size, evaluating the sizing, subducting and everything else. Just making sure it's all compatible clearance wise and all that. So we analyze that typically takes less than 24 hours. And then we confirm the quote. You can pay a deposit to confirm it. So it's 500 to $1000 depending you pay that deposit.
And then we'll go ahead and depending on where you are in the rebate programs will either move right to your install. So we'll go ahead and schedule your single day install. That could be as soon as the day after that, it could be a week away, etc.. Based on your schedule and our team's availability. If you're in an area that has a rebate program that might need some pre-application steps, we have a customer Success team that will walk through all of those steps for you, so they'll prepare all the documentation for you, the submissions.
They'll guide you to any steps that you might have to do as the homeowner. So we get all the rebates taken care of. Once those are cleared out of the way and are pre-approved. We would then schedule your install on the install day. It's a very streamlined process, so our crews typically show up in the morning between 7 and 9 a.m., depending on location and so on.
They'll be in there in the morning. They'll walk the homeowner through an orientation. So we walk through and confirm exactly where replacing the outdoor unit. We'll talk through the whole system, design the work they're going to do, explain everything to the homeowner. We'll start by disconnecting the gas line, removing the existing heating system.
We'll have part of the team will be inside installing the new air handler that replaces the furnace completely with the new Jetson system. They'll also do any custom duct work to connect that to your existing ductwork in the home. We have a separate team member outside that's placing the outdoor unit, so they have a pad for the unit.
They're placing it. Electrician on the team is running new circuits to both of those units at the same time, running the refrigerant lines. And then by the afternoon we're doing a full commissioning of that system. So we have a sort of fully digitized commissioning system that we go through that ensures that the system is charged perfectly for the line set length and everything else.
It's verified. We do a full verification of the performance of that system, airflow and everything else. We set up the app for the homeowner. We've installed the new Jetson smart system, which we haven't talked to it by this point. So that includes our energy monitoring system, air quality monitoring sensors, a smart thermostat, a Jetson app that monitors all this, and sort of by, let's say, late afternoon or dinner time, the team is walking the homeowner through using the Jetson app, getting their accounts set up, controlling their schedules, monitoring the system, and so on.
And then, yeah, basically an end of that day, your home is converted to clean energy. So it basically two steps is online instant quote a couple photos. Pay your deposit and then we show off for a single day. Switch.
00:23:25.090 — 00:23:27.170 · Speaker 2
Holy shit.
00:23:28.810 — 00:23:37.810 · Speaker 2
All right. I have so many questions. That's remarkable. The first time someone is actually going to the homeowner's house is installed a.
00:23:37.850 — 00:23:58.010 · Speaker 1
Yeah, for the vast majority of installs, we do a technical review post that photo submission process where we will determine if there's anything out of the ordinary for the home where we need to do a walkthrough, which will if we do do a walkthrough, it'd be like a video walkthrough. Typically in a smaller set, maybe 10% of homes, we would do an in-person walkthrough or less, but vast majority like 90%.
There's no additional in-person time for the install.
00:23:58.050 — 00:24:26.530 · Speaker 3
I'm curious just about so totally understand the ability to remotely quote and figure out, like based on a bunch of different factors, roughly what the price that makes sense for an install. But how do you figure out the right sizing getting design right? How are you verifying things like, hey, it looks like this unit might work, but what about duct capacity?
How are you figuring out those kind of details? So both sizing the equipment appropriately and duct capacity as part of your process.
00:24:26.570 — 00:27:37.960 · Speaker 1
Yes. We have a very different approach to both those than most folks in the industry. At this point, we've done remote evaluations on. I think north of 30,000 homes. So really high volume of homes. We have closed loop data. Our systems, once we install them, they're fully monitored by us. We know the thermal model of the home.
We know the weather. We know the actual output of the unit that we measure. And so we have an initial full building modeling engine that is based on initially some NREL work. So we were modeling the building. We think far more accurately from our data than any kind of typical manual J or F2 80 in Canada calculation.
Our numbers tend to match the real measured numbers far closer than those. And so we have that remote modeling of the building thermal envelope that's on the sizing side. We then have our actual performance of the unit. We do a full annual model. So every hour of the year based on typical patterns etc. we determine the right heating cooling loads for the home, the right system sizing based on that, based on the real performance of our systems.
On the load side, we have a duck load calculation step that happens in that modeling. It's actually far less of a challenge when you properly size the heat pump system. So a lot of the traditional issues people have with duck sizing and heat pumps is because the default that was happening for a long time for heat pumps and still happens today, is over sizing systems substantially, which means you're then requiring far more airflow than you should need in the home.
And so an example would be a lot of folks would see there's a 60,000 BTU furnace in the home. They would do some like rough manual de calculation and come in and say, okay, the home's heat load is like 50,000 BTUs an hour. The actual heat load might be 38,000 or 41,000 in that home. And so the traditional installer might pick a five ton heat pump that actually needs 2000 cfm of airflow and come in and you either put that existing work that's undersized and you have noise issues because there's the velocity is too high higher, etc. the reality is that home probably needed a three or maybe a four ton unit, and so the airflow requirements are actually much more similar to the furnace that was in place.
And the vast majority of homes actually have ducting that supports that already. Today, that's one part of it. The second is that we're able to tune airflow because our system is we have much deeper control of our systems. We have a whole layer of really fine tuning the airflow from that system and changing other parameters that let us match digitally the performance and deck load profile that we want for the home.
That's different than a typical heat pump, where you just put it in and it's got a fixed CFM, etc. so we have much more control on the software side if needed, but vast majority of homes is actually not the main constraint. We do have some. I'd say it's like a relatively low percentage. I don't know the number.
It might be 5% or 10% less than that. Probably where we come in and were. It's closer to the sort of duct load we're comfortable with. And then in those cases, we'll either ask a homeowner for some measurements of the main supply trunk, or we'll do an in-person walk through and come and count registers and so on.
It's a very low number of homes that are typically very obvious from our remote analysis and photos, that it might be marginal in the vast majority. That's not really required at all. And then if we do have to make any ducting modifications, usually quite minor. So occasionally we'll add a return, for example, but it's usually quite minor if you've sized the system correctly.
That is the key thing. If you're not over sizing the heat pump, then you have far less chance you'll run into issues on duck sizing.
00:27:38.000 — 00:28:10.800 · Speaker 3
Got it. Makes sense. Yeah. If you're keeping the airflow requirements down closer to 800,000 CFM for a decent sized house, like, yeah, you're going to have not going to run into issues for the tuning. Are you saying like you're able let's say you've installed a system and turns out like static pressure is pretty high.
You actually need. You thought you needed more airflow or like the unit is saying, it needs more airflow, but you don't quite have that capacity. Are you able to tune things like the output temperature that's coming out of that air handler, so you can tweak some? Got it. So then that reduces your CFM that you need.
00:28:10.840 — 00:28:50.110 · Speaker 1
Sounds like yeah we can tune those. I would say we almost never face static pressure issues because we've sized the systems correctly in the first place. That's really not a thing. And part of our commissioning process, we actually measure and test static pressure on every install. It is very, very rarely ever a core issue for us on those.
If we are concerned about airflow, it's less at the point of static pressure being a problem, and generally more so for optimal noise performance in the home where we want to keep velocity low like typically we're well within limits on on even the oldest homes, the very small duct work on static pressure.
And then it's more of a hey, we could fine tune airflow to bring the noise down. If velocity went from 900 to 800 cfm or something, or I'm sorry, got it.
00:28:50.150 — 00:29:13.270 · Speaker 3
I mean, it is a it's a fascinating aspect of this that you control all aspects of the experience, this idea that you could with a typical manufacturers equipment that you're installing, you don't have access to all these knobs and levers to be able to tweak things. If you're coming up with coming up against unexpected issues and homes like, it's very compelling reason for doing what you're doing.
It's very cool.
00:29:13.310 — 00:29:53.710 · Speaker 1
Yeah. And then related to that, the other part is this is not what adjustments you might have on normal heat pump. And they're very limited. I was like usually dip switches or settings like on the actual PCB. You're gonna go change. All of our control is remotely or software defined. So we can pull up our internal dashboards of every single system we've installed on a map.
We can drill down to any system and get way more data on how it's performing than any tech in the home would have. So hundreds of data points, refrigerant temperatures, pressures, air flow numbers, etc. from it. But we can also drill down to those settings. We need to fine tune airflow or fine tune temperatures and so on.
We can do all of that remotely. And so we're able to kind of really look at all the data from it and say, okay, maybe we'll make a small tweak here based on what we're hearing from the homeowner and make performance a little better for them.
00:29:53.710 — 00:30:24.860 · Speaker 3
Got it. And how do you deal with it's awesome that you guys are monitoring air quality as well. Like how do you figure out, like if you're going into a particularly an older home? And for that one picture that you're taking of the equipment, you're not necessarily seeing whether like the ductwork that's in the basement or the crawlspace is well sealed or not.
You can't really see that. Like in an attic, for example. What happens when you come across these scenarios where the ductwork is completely unsealed? It's not properly insulated. Are you also doing those other services to improve the ductwork or the building envelope for that matter, for those kind of issues?
00:30:24.900 — 00:32:01.820 · Speaker 1
Yeah, we have partners in the regions we're in that we refer that kind of work to. And so it depends on the region. In Massachusetts, for example, a lot more older houses. As part of our process, we'll have a home energy assessment done before install, and we'll have any remedial insulation work done ahead of our install there.
In other areas we have partners or for customers to if we notice opportunities like that. I think one thing in the industry where our perspective is different is that there's a lot of mentality. We're kind of, oh, heat pumps only going to work if you get your house to like near passive house standards and you seal everything and improve the envelope first.
And at the end of the day, like the relative cost of energy output and heat output is all that actually matters. And so if your relative cost of a BTU output is comparable or lower than the fossil fuel system, you're good anyways. And yes, it might subtly change the sizing, but typically with a modern variable speed unit, it's not going to have such an impact that if you decide to invest in better attic insulation a year from now, it's going to really change the system in a way that would have picked a different system size for it.
And so our general approach is the biggest impact lever you can have is just get the fossil fuel system out, get them upgraded to a heat pump. If the homeowner is interested in making other upgrades to the envelope, then great. But I think for a long time we've kind of been in this trap of like, oh, to put a heat pump in, we need to make a bunch of other complicated upgrades to the home that are often very difficult or expensive to make versus just get the fossil fuel system replaced.
So I don't think that should be a barrier. It's sort of a it's a bonus. And if it makes sense and all time to do it, we would recommend it highly, but not a requirement to put the heat pump in by any means is making those upgrades. The upgrades would help just as much with the furnace in terms of energy costs. If you have leaky ducts or if you have bad insulation, you should do it anyway.
If you have a gas furnace, so you're going to save a comparable amount either way.
00:32:01.860 — 00:32:46.250 · Speaker 2
And I got to ask about the remote sizing and design. So if you're going to make changes to the envelope or if you're in Massachusetts, something's going to come through. Like, you can have a very large impact on the amount of heating or cooling load the home actually requires. And like we use a bunch of those same databases in our software as well.
And they're not always that accurate. And the homeowner doesn't always know. Right. Like it's changed hands three times since the last major construction. So how are you getting dialed in assessments of the load requirements for a home to really size it. Given that all those things could be in flux, frankly, like between when the homeowner comes to you and then when you actually do the install.
00:32:46.290 — 00:34:19.120 · Speaker 1
Yeah. The practical answer is those things I think we in the industry think a lot about all of these details in the in practice, these don't actually flush it to mattering as much in the overall load calculation. So the big ones we cover already. So for example if you're going to do installation upgrades as part of massive, we already factor in them.
You're hitting the new minimum standards that the HCA process in Massachusetts requires. So that's already built into the model. We have a pre and post heat load that we calculate for every home. We use the post and confirm the upgrades. We're going to happen with that homeowner. But for the more minor ones like hey, yes, this window was replaced with a triple pane window versus a double pane that I didn't know about at the end of the day, like the margin and all these calculations, when we look at the actual heat loads, there is a huge amount of margin.
The margin is far too big on a typical, even well executed manual day calculation, typically 30 to 40% overestimating heat loads from actual data. And if there are our houses where in our sales process we find there's something, there's question marks on it, there's been like a major change or addition.
We're not sure about something. The homeowner is not sure we'll go and request energy bills and actually do an energy bill based assessment to complement ours. Typically they end up being very similar to ours, but we will verify with energy loads if we have questions about if anything's out of the ordinary.
But now we can say from literally tens of thousands of homes and now thousands of homes will be full cycle done. The heat load calculation installed the system, measured the heat loss. It's extremely accurate. And even our numbers, which are typically lower than manual days in most cases, are still significant margin above the actual real world heat loads.
00:34:19.159 — 00:34:24.240 · Speaker 2
All right. Some things you said in there like Dems fighting words for us. But this is not about Ed and Eric.
00:34:24.240 — 00:35:12.640 · Speaker 1
Just yeah, I'm being a bit maybe intentionally productive there. We have a whole team that actually thinks about this all day and spends a lot of time like optimizing the algorithms for this. So I'm not saying it's not important. It's core to we're doing it's important. But I think there's like a limit of sort of how much time I could spend going and putting a tape measure to every window and figuring out, like, is this window three feet by four feet?
Versus is the glass here and is the R value on the wall. This at the end of the day, like they all kind of average out if you've made a good estimate of it and we don't end up finding any more accuracy doing that. We've sort of a b tested like send someone to the home, do the best possible typical manual J like measuring down to the half inch every dimension of the room, the output we get is no closer.
Typically, it's much further to the actual energy. Use is measured by like previous energy bills or modeling. Or once you put the heat pump in or actual loads, then our model load.
00:35:12.680 — 00:35:46.360 · Speaker 2
Well, the thing that gives me like great solace here, that frankly, is like no one else has. You guys, based on the software and the hardware you have in the home, you are testing your measurements against actuals after the fact, and given the remote control capabilities you have over your systems, you really can fine tune it after you leave, which is very not just atypical.
It's like doesn't exist anywhere else. So I can see those couple of innovations leading to you being able to do design in a pretty different way.
00:35:46.400 — 00:36:25.880 · Speaker 1
Yeah. And if we I think part of our philosophy as well is I'd rather have the right size of fish at home or a system in like 99.9% of homes and be wrong on a couple where we actually decided to come back and see what we need to upsize the system. I'd rather do that than go in sort of default to like, let's oversize every system to make sure we're covered and not getting a callback.
So we really strive to be how do we put the best performing system in that home? And now, like well over 1000 homes installed, I could count on one hand, like the number we've had to come back and like adjust it, either upsize or add a heat strip like very small number there, but I'd much rather be wrong on a couple then be sort of oversize on the majority of them.
It's kind of how we think about it.
00:36:25.880 — 00:36:27.000 · Speaker 2
That's super compelling.
00:36:27.040 — 00:37:01.990 · Speaker 3
Yeah, that feedback loop you are getting and also that you are this one touch point for the customer makes a huge difference. I feel like you are taking a lot of interesting risks. It's awesome to hear that you very rarely had it come back and bite you, but that you are totally owning that experience and making things right if they go wrong and that.
Yeah, that you like Ed said, you've got this ability to you make a prediction, you do the install, you get the real world feedback, You tweak and you're doing that over and over again. That's gives me a little more confidence. It's gonna work out.
00:37:02.230 — 00:37:26.790 · Speaker 1
Yeah, yeah, it's kind of the philosophy across the whole company. It's not just on the install on design side. Like that's ultimately we have to measure every part of that process and experiment continuously with how do we drive down costs? Does this work better? Changing our install process this way?
Do we get better results doing something. All we can do is have a hypothesis measure it and then if it works, adopt it. Otherwise, continue to iterate on parts of the process every day and week. And there's just attempt to make that better and better every week.
00:37:26.790 — 00:37:40.470 · Speaker 3
Basically to step back actually higher level again. We've kind of quickly jumped into talking about ducted systems. What kind of system is this? What kind of are there certain homes that are compatible with your systems versus not?
00:37:40.510 — 00:39:36.700 · Speaker 1
That's a great question. So our system today which is called jets and air is central ducted cold climate heat pump system. So that applies to the majority of homes in the US and Canada which are central ducted homes, about 75% of homes that would have a central furnace in the basement or attic or crawlspace.
We're targeting those homes today with retrofit systems, so upgrading their existing system to a new heat pump system that will heat and cool the entire home with existing ductwork. That's our core. Especially today, we recognize this doesn't cover all homes. So there are our homes, very regional differences in sort of the makeup of the housing stock.
But there are homes that have baseboard heaters today and no ductwork. They have been for heat, radiators, all sorts of things, as you guys know. And so we've focused on this kind of biggest group of homes first, given that we can have the most impact there. But also our model is really about to get the cost down.
We need to do very high volume and standardize the process. So that's from how we train our technicians. We'll talk I'll talk about that. We have a whole thing called Jetson University. They go through, you get trained the process they follow, the way we kit out our installation vehicles, the way our warehouses operate.
All of those pieces work, and we can get to the kind of price points we're at, because we're doing those in high volume in cycles. And so one choice we made early was to kind of keep that really narrow focus on that archetype instead of, again, more traditional. The industry would be, yeah, wherever we can do work, we'll do it.
So we'll do different systems. We'll kind of just change all the time. We've really tried to be quite disciplined about staying in that core lane today, and so that's where our focus is now. And for the immediate future, over time, we will sort of expand that product portfolio to be able to serve more homeowners.
Absolutely. But that's not something we're working on kind of short term today. It's very much about continuing to scale up the core focus right now of these central ducted systems. And we think for a vast majority of homeowners, that's clearly the right solution. I think for homes that don't have ducting, then absolutely.
A ductless heat pump system is great, but if you have central ductwork in place, that's absolutely the best system for the home. No real arguments there.
00:39:36.740 — 00:39:48.340 · Speaker 3
Got it. And I assume you mentioned one outdoor unit, one air handler. I assume you can do multiple outdoor units, multiple air handlers. If it's a larger home, you got an attic system and a basement system like you can handle that situation as well.
00:39:48.380 — 00:40:18.860 · Speaker 1
Yeah, we have plenty of customers that have 4 or 5 systems and some sort of very large homes, especially in Massachusetts, is very common, but also Colorado. We've got some quite large homes out there, but the yeah, the bread and butter, most homes would be single system, 1 to 1. Larger homes might have multiple.
Our jet center system is a mini VRF system, so we're not utilizing that today in that basic install of 1 to 1. But the system is actually a very advanced VF unit. So we have the ability to address multiple indoor units off of that outdoor unit.
00:40:18.900 — 00:40:39.300 · Speaker 3
All right. So I'm dying to know. Talk a bit more about how your product is differentiated relative to, let's say, one of the other big OEM brands that are out there that other folks would be familiar with other cold climates, style, high efficiency, modern, high tech equipment. What's different about your outdoor unit?
What's different about your indoor? Tell us more.
00:40:39.340 — 00:44:38.520 · Speaker 1
Yeah, you can think of the basic like mechanical parts of the unit is comparable to the next best high end cool climate unit. So performance wise, the compressor in the fans and everything else would be very comparable to what's in here, like Mitsubishi Hyper units performance wise, were, I think, on par or exceeding the Mitsubishi hyper heat on all core metrics like HSV two and Seer ratings and super ratings and so on.
There's not like in the basic thermodynamic parts, very similar, where our hardware is more unique and gets different is in the electronics and controls. And so we have our own software, electronics controls, sensors that are running on top of that basic the compressors and the coils and everything else that are in the units.
And that's where it's quite different. And so Jetsons system, as we mentioned earlier, is fully remotely monitored by us. And so that means we're able to actually ensure it's performing properly. We can preemptively diagnose issues. This has been, I think, quite a delight for so far. We've had many situations where we've noticed issues when the customer hadn't even emailed in or called in yet with an issue, and it might be something like.
Most common would be we're noticing their air filters getting clogged and their performance is degrading, and so we'll be able to mesh them and say, by the way, change your filter. And we're now building that into the app and so on over time. But things like that, we've noticed in a couple of cases after we install like, hey, there's a likely slow refrigerant leak.
And so before they have a no heat call or they've got some more damage was let the customer know, hey, we've noticed something. We send a technician out there tomorrow to take care of it before you even knows an issue. It'll be fixed. I think the monitoring is a big difference there. Our system also has air quality monitoring.
So within the system we're monitoring PM levels. So PM two point 5 p.m., 5 p.m. ten levels. We're monitoring which is particulate matter in the air. We're monitoring VOCs, volatile organic compounds CO2 levels in the home. And so we're we're working adding more of that to the homeowner app. So we'll be able to actually see all of that in your home understand how it's performing.
But also over time we'll add some smarter features like let's say automatic circulation when the PM levels are high, alerting you to say, open a window, you need ventilation, or activate your hub if you have one automatically. So really thinking about the whole home and how do we both make the comfort and the air quality and safety of that home higher through that product.
So that's one category of sort of differences on it. Another one would be on actually saving the homeowner money and operating costs every month. This is the big one we're focused on going forward, because we have that thermal model of the home, and we have very low level control of the heat pump system.
We're able to think about how do we optimize, how we run the system throughout the day to maximize your comfort while minimizing the energy cost for the home. So this varies in different regions and utilities. But as a background, utilities across the country all have the same challenge, which is peak load throughout the day.
So you have this demand curve, often called the duck curve, where you've got the solar market, say, at noon. In Texas, power might be nearly free for utilities, where solar's peaking usage is lowest from 6 to 8 p.m. it might be $1,000 a megawatt hour, like 3 or 4 times the average price because production has gone down, usage is gone up, etc. so those times are very expensive for utilities and then for homeowners.
As a result, many utilities have time of use rates, for example, or they have incentives for reducing those peak loads. Now, the sort of naive approach to that is like, you're not just going to set your thermostat to like turn off for peak times throughout the day, and your home won't be comfortable. But we can actually model exactly the comfort impacts.
We might run your heat pump a little harder and be a degree or two warmer before the peak load time starts, and run it at 30%, let's say during the, you know, during the peak hours. But the net result is how do we optimize how we use energy to actually save you money throughout the month by being smarter about that?
And so there's a lot of stuff we're building there around sort of the energy side of the business that will go at a basic level there, but go much further around. How do we optimize energy use in the whole home over time? That's different. And then, yeah, I think that's the core part. We also monitor sorry.
Last thing is energy use in the home. So we put a whole home energy monitor in every install we do. So we have whole home air quality whole home energy monitoring, remote learning to the system. We can remotely service the units, diagnose them and the Jetson smart app. So that's the core today.
00:44:38.560 — 00:44:39.320 · Speaker 3
Super impressive.
00:44:39.360 — 00:44:52.440 · Speaker 2
All right, Stephen, I got to get into the economics with you. So what I've read is that you guys can be 30 to 50% below competitive quotes. Is that number right?
00:44:52.480 — 00:46:00.070 · Speaker 1
Yeah. That's correct. So if you look at the massive data sets, the average whole home central ducted cool climate heat pump upgrade somewhere between 25 to $30,000 depending on the system size and their data sets. Our typical quotes are anywhere from 15 to $18,000 today, so we are substantial. That's before any incentives.
That's the top line price so substantially below. The difference is actually larger when you factor in incentives. Because if you think of, let's say you got a $8,000 rebate from Massachusetts, you're down to like $8,000 with us sometimes versus $22,000. So it's actually even bigger difference. So yeah, substantially lower.
And and it's not I think this is a part that we actually still struggle to communicate is it's really hard to explain sort of way cheaper and higher performing. So I think this is actually one of the sales challenges that we have today is educating homeowners. Oh, this sounds like too good to be true and cheap.
Am I going to be cheaper keeping out by going with this system? Because my local contractor quoted me $28,000 for whatever brand brand system. When in actuality we believe our system is generally much higher performing and efficient spec wise, and also just a much smarter system. So it's sort of better product at a much lower price point.
And it's actually a one of the communication challenges we're still working through.
00:46:00.110 — 00:46:05.510 · Speaker 3
Do you offer any kind of a guarantee or anything like that to help get over that hurdle? How do you have to.
00:46:05.550 — 00:46:45.590 · Speaker 1
Yeah, we I mean, we fully stand behind everything we install. We have a Jetson care program. So Jetson care is like the most comprehensive kind of bumper to bumper coverage in the industry. It's a ten year complete. All maintenance included, all service work, full replacement guarantee, like zero cost to the homeowner plan.
So there's no, like, hidden diagnostics fees or most of these warranty plans are kind of bogus or they don't cover the actual expense of repairs. This is everything is covered. All the remote monitoring, all the software access, everything covered. So we have that plan called Jetson Care. The vast majority, like 95% of our customers pick that.
And so you've got ten years of complete coverage on the system of anything could happen to it, and all of your maintenance covered everything else covered for it. All the software.
00:46:45.630 — 00:47:02.910 · Speaker 2
Where are the savings coming from? Like if you looked at a stacked bar chart for margin and cost of the various players in the space? Like, where are you seeing the most gains in your vertically integrated model versus the standard model today?
00:47:02.950 — 00:49:41.010 · Speaker 1
Yeah, they come from really every layer of it. So it's one of the reasons we've taken on a ton of complexity to make this work. And it's not like, oh, there's one magic bullet. If you just erase this line item, we get there. We really found the reason we had to invest in the full stack was because it's a stack of every part of just inefficiency and cost added.
It's on the hardware side. We sell our own units directly, so we've typical heat pump. If you buy like a carrier heat pump, let's say it was it's made by one of a couple manufacturers and make most of the heat pumps. It's then rebranded by carrier and sold to them. It's then sold to the distributor, then sold to the guy in the truck, then sold to the homeowner.
So there's four layers of margin stacking and the hardware that's on the heat pump. There's hundreds of additional materials that go into an install that often folks don't think about. That actually can add up to as much cost as a core heat pump in that building materials cost. Those are typically really inefficient, at least sourced as well by most contractors.
It's really hard to manage hundreds of line items and how you source those. When we're doing thousands and thousands of heat pumps as we are, then we can invest in organizations and infrastructure and supply chains to source all those much more efficiently so we can remove costs at like all of the long tail of components that go into the install as well, which helps us get cost down.
There's a lot of inefficiency on site. So we've gotten down to this install process that's generally a single day. It's really streamlined. We have great technicians. We hire them. We put them all through a Jetson called Jet Start program. So it's a Jetson University program. We fly them all in for a multi-week course with on hand practical hands on training and testing and demonstrations going through all of our software they use on site, everything else get them trained ups, they can get up to that efficiency standard of actually moving quickly with the quality we want for installs.
And then there's all the back office functions. And this is everything from finance to the rebates administration to permitting, to document generation, to customer support. All of these functions that we've been able to invest significantly in and in most cases, invest significantly in software to power those things to be more efficient than kind of manual steps.
And again, each of those is just removing ours. So we just think about how many sort of manual hours have to go into getting one heat pump installed, because traditionally you're passing on that cost to the homeowner. Every hour you've got someone filling out forms in the office or calling you to generate an invoice or collect payment or whatever just means more cost.
And so we kind of look at the full picture and just say at each of these steps, let's scrape out 30, 50% on each of those and make the investments to do that. And many of those investments are ones that wouldn't make sense on a if I were if we were single installer in one city or even a regional basis, they're investments that are paying off because we're able to do this across multiple geographies and are planning to be national with the product.
And so we can make those investments in kind of the core infrastructure to support that.
00:49:41.050 — 00:50:05.970 · Speaker 2
That's fascinating, Stephen, and you've taken on a ton of complexity, but also the scale of what you're doing is sort of it's mind blowing to me. I think your typical listener is probably mind blowing there. So you just raised a ton of money. Tell us about how much you raised, who you raised it from and why you're building the business this way, because I think it's quite unusual in the HVAC space.
00:50:06.010 — 00:52:17.600 · Speaker 1
Yeah. So we started off with actually pretty modest amount of capital. So we had raised a small amount of seed funding when we got started and really focused on first proving out the model. We had a effectively a spreadsheet that worked through the numbers and said this should work on day one. And we spent several months kind of working through that, another six months doing our first installs by hand, validating the model could work, and so on.
Then we started to we actually launched Jetson publicly and started selling systems. This is roughly 18 months ago, and the attraction was sort of immediate, resonated with homeowners. In our first couple markets. We had a great pipeline and volume of installs we started doing. We had the measurement and metrics to sort of show that we were getting.
We went from probably taking three days on every install to start to being really inefficient, and the cost being high and losing money on installs to like that steadily just entering the right direction to where we wanted it to be in the model. And it became clear to us that the approach in the model had legs and would help us meet that goal of actually electrifying millions of homes and getting homeowners switched over and decided that there's two paths we could take.
We could take a more organic path where we just continued to grow based on growing one market at a time, lower level of investment, and sort of using the proceeds of the installs we're doing to fund the expansion. But the really driving factor for us was that I think we're in a pressing time and sort of the climate crisis right now, we have I lose sleep every day thinking about like that one home that just putting it every time I see a truck putting a furnace in, like driving around the city here or something, that's a 15 year cycle, right?
That homes like locked in to fossil fuels for 15 years. And so we just we really think about this. How do we move as quickly as we can to make this option more available to homeowners to choose that electric system? And as we just thought about how we do that as quickly as possible, it was clear that capital would let us do that more quickly.
And so we decided to raise some money from a more traditional group of Silicon Valley BC folks, primarily a mix of consumer and climate investors. We are at the sort of intersection of obviously, we're focused on the energy transition and climate. And so we have a great set of investors that come from that background.
But we also brought on some more traditional sort of top tier consumer investors that have built great consumer companies and also vertically integrated companies as well. And so, yeah, we ended up raising $60 million financing. That's really supporting our expansion and growth throughout the year.
00:52:17.640 — 00:52:20.160 · Speaker 2
That was 60 zero, 60 million.
00:52:20.200 — 00:52:22.400 · Speaker 1
Yeah, 60 million in total was what we raised.
00:52:22.480 — 00:52:23.960 · Speaker 2
Was North Venture funded?
00:52:23.960 — 00:53:14.160 · Speaker 1
It was yeah. North had raised a couple hundred million in venture financing. So that was a big part of the north and North was a very different business and that we had this deep S-curve, right. It was a deep technology business where we had to build new materials and make our own chips and build factories and all sorts of things to get there.
And so sort of deep S-curve and was like just coming out the end of that at the end of North, we had just launched sort of the first version of the classes. We were getting ready to do a mass consumer version. Jetsons, a bit of the opposite, in that we were already in market with a very strong core business, basically from day one.
Like we were actually people were paying us for our product and serving the market, and we were generating substantial revenue right away. And so it's a bit of a different model where we didn't necessarily need the funding. We had a path to continue to grow organically. We were the business itself is a great business to start, but we ultimately chose to take on that capital as a lever to accelerate the growth.
00:53:14.160 — 00:53:20.760 · Speaker 2
I could ask a million more questions about this one, but I think we should move on to get a couple more in.
00:53:20.840 — 00:53:27.080 · Speaker 3
Well, I just have a very simple question before we get to something a little bit bigger, what markets are you operating in today?
00:53:27.120 — 00:53:35.360 · Speaker 1
Yeah, we're currently in six markets today, so we operated in Massachusetts. We have three locations in Colorado. We're in New York and British Columbia.
00:53:35.400 — 00:53:51.200 · Speaker 3
Fantastic. And I think we've talked about the business. We've talked about the unit economics. You've touched briefly on this Jetson sort of training program. Can you talk more about that? Or like if you're a contractor and you're hearing about this, like how do you get involved?
00:53:51.240 — 00:55:53.190 · Speaker 1
Yeah. So the training program is for technicians that we hire. So are electricians and HVAC texts. Apprentices go through this program. What we found, and this was a learning, I'd say, from when we started. We hired a great set of very experienced industry veterans. So folks that had been in the trade for a long time, the first few teams we hired, and we kind of worked with them and sort of hands on built the process and the standard operating procedures for our install.
As we started to scale up the teams and continue to hire also very experienced folks, what we found is that there was a huge variability in really the core skills that would go into a heat pump install and executing those successfully. And even though someone might have 30 years of industry experience.
It was not a guarantee that we actually would have the requisite skills that we needed to see to complete the install in the way that we wanted to see it completed and the quality level we were looking for. And so ultimately, what we found is that to sort of experience and was not the right sort of bar for ensuring folks who were qualified to do the work we needed to do.
And so we went through several iterations of like training programs from less intensive kind of on the job training to like sessions before every install. So we realized really we needed a full hard reset where for folks coming in, we kind of started from the most basic skills and progressed through every step of that install process from kind of more of the informational stuff of how our systems actually work, how will the sensor systems work that are different to all the sort of hands on skills?
How do we do refrigerant line connections? How do we do pressure tests and vacuums? How do you do the commissioning procedure? How do we run lines properly? How do we do lines that covers just all of the pieces that go into the install such that we can ensure that when we're across now six locations, but soon, many more than that, that we get that consistent quality.
So every install we do meets that bar and also is done efficiently to hit the cost targets that we have for homeowners. And so yeah, we ended up creating this program called Jet Start. So it's a two week in person. We fly teams into Colorado. We have a facility built for this. There's all these practical setups.
There's like numerous jets and heat pumps there. Will they go and do the mock installs and mock houses and everything. And that's been a huge success. So we're now rolling all new teams through that program.
00:55:53.190 — 00:56:14.910 · Speaker 2
So Stephen, will you ever. Well, I would imagine a bunch of our listeners or contractors, they're listening and they're thinking you're a direct competitor. So if they're feeling threatened, like, what would you say to them? Or are you ever planning to, like, expand your installation network or, or branch out from this like pure vertical integration you guys are doing?
00:56:14.910 — 00:57:49.500 · Speaker 1
Yeah, that's a great question. I'd say the first part is the industry is massive, and I think we all know the actual market share of even the largest players here is tiny. Like, it's not like HVAC install. We have 2,030% market share players. We have a lot of 0.1 and 0.00 ones in there. And so there's room for everybody.
We hope to impact as many houses as we can, but at the end of the day, there's just a baseline of like 7 million furnaces being put in the US today already, and there's going to be thousands and thousands of contractors doing that work. And so we hope to sort of push the bar for moving folks towards electrification and also act as a bit of a forcing function for other contractors to really get on the electric bandwagon, if you like, and start thinking about these systems and being more efficient and competitive with offering them to homeowners instead of keeping them as these sort of out of reach option.
So we hope will be kind of a bit of a positive force to other contractors to actually sort of move more towards heat pumps and all electric systems. And I think it will be one player in a market with thousands and thousands of companies out there. We hope to have a huge impact, obviously. And so we're focused on doing it at a big scale.
But I think there's plenty of room for folks there. on the second part of your question. Yes, at the right time, we likely will have a pathway for other contractors to work with us. That's not something we're doing today. We're really focused right now on just making sure we nail the customer experience, the process and the first markets we're in.
We won't be able to cover every market ourselves, so we will absolutely have a set of partnerships that we pursue with great installers that are aligned with our mission and want to help get homes electrified. So that is part of the plan is at the right time, having others kind of come on board as part of our network and do the work together.
00:57:49.540 — 00:58:35.250 · Speaker 2
I hope you also act as a forcing function for a bunch of the manufacturers out there to open up their data, to open up the sensors they have in their equipment, or put them in such that automated commissioning checks you guys do are available to your standard contractor installing the harbor for another OEM.
This is one of the things that we hear about all the time that's so darn hard with heat pumps and it's all closed, gated and their jury rigging stuff with ecobee thermostats and like, it's just way too hard to be able to do the assessment after the fact. The performance checking, the fine tuning that you guys are doing.
I think that's I mean, God, people have been wanting this for a long time. It's awesome to hear that someone has actually brought it to the darn market.
00:58:35.290 — 01:00:06.330 · Speaker 1
Yeah, you have done something else there as well. You mentioned sort of an ecobee thermostat, and this is something that I think most homeowners don't actually understand really well, but is a big pain point is that if you want to, as a homeowner, have that modern consumer experience in your home for your controls or like a nest or Ecobee, let's say you have to basically downgrade your system to like a basically on off non variable speed system.
That's going to be nowhere near as high performing or efficient as it should be, which is insane. Yeah. They just have the on off relay controls or you have to not have that and pick like the 1990s looking like ridiculous OEM thermostat that everyone seems to produce. And there's really no in between. There's like quote unquote smart thermostats from some of the manufacturers, which are universally horrible.
So that's one of the reasons we invested in our own Jetson thermostat or Jetson app, etc., was to give you a nest like experience or hopefully better over time that is actually communicating to the heat pump and so maintains the full efficiency, variable speed control and everything else you get with the communicating system.
So I couldn't agree more with that. I think in your comment about other manufacturers and kind of pushing them to make these things available and do similar things. Our hope is that the approach is somewhat similar to what Tesla has done in the automotive industry, where I think without Tesla and you can you can go off on.
But whatever the current Elon thing is now. But as a company, Tesla really push the industry forward. They I think without them we wouldn't have the products we have from all the other major carmakers today that have moved closer and closer to sort of the technology and stuff over a long period of time. They really forced others to rethink that strategy and adopt modern technology.
So hopefully we can do the same thing in this industry.
01:00:06.370 — 01:00:20.120 · Speaker 3
Be fantastic. It did an incredible job helping people understand what's possible and redefining in people's heads. What can we actually do? And if you guys can be that market leader to create that kind of catalyst and that change in the whole industry. Man, power to you. That would be awesome.
01:00:20.160 — 01:00:32.000 · Speaker 2
Stephen, I am insanely excited right now after this conversation. Super inspired by what you're doing. Thank you so much for taking the time to join us on the Heat Pump Podcast. I'd loved the conversation.
01:00:32.040 — 01:00:39.560 · Speaker 1
Yeah, thanks. So this is a fun chat. Always good to geek out on heat load calculations and chat with folks that are likewise pushing the envelope in the industry, so I appreciate you having me on.
01:00:39.600 — 01:00:40.560 · Speaker 3
Thanks, Stephen.
01:00:43.600 — 01:01:10.000 · Speaker 3
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