We're joined by Dandelion co-founder and President Kathy Hannun on this week's show. Kathy tells us how her time at Google X led her to creating Dandelion, a startup focused on making geothermal energy accessible to all. She shares what it's like to work at Google's famous moonshot factory, how she came to pursue a moonshot of her very own, and how she grappled with the realization that her startup needed to significantly change gears to serve its target market.
We're joined by Dandelion co-founder and President Kathy Hannun on this week's show. Kathy tells us how her time at Google X led her to creating Dandelion, a startup focused on making geothermal energy accessible to all. She shares what it's like to work at Google's famous moonshot factory, how she came to pursue a moonshot of her very own, and how she grappled with the realization that her startup needed to significantly change gears to serve its target market.
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Darrell Etherington 0:00
Hi, and welcome to found I'm your host Etherington and I'm joined by my co host and platonic life partner, Jordan Crook.
Jordan Crook 0:06
Oh, I'm so honored to be that. Thank you. That's
Darrell Etherington 0:09
right. Yeah, we did have a fake wedding in Las Vegas. Actually, at one point, we tell people we're married all the time. And people are very confused about it. But
Jordan Crook 0:18
they like believe this, which is so funny to me. I mean, I guess if you tell someone that you're married to someone, they're gonna believe or
Darrell Etherington 0:25
not believe you? Yes, exactly. Anyways, that's neither here nor there. Because this is a show where we talk to a different founder every week, all about their experience of building a startup. Jordan, what do you think about our conversations
Jordan Crook 0:38
so far? One of the cool things is that we meet these founders right in in the midst of it as well. And we're not talking to someone about what happened 10 or 15 years ago, we not only get a look at some of the stuff that's gone wrong in the past couple years, or some of the big moments that have gone right, but we're hearing about what they're actually tackling right now in this very moment. We've gotten a look into into how they're feeling as people. And I maybe say that too often. But I think it's something that's overlooked in our industry, particularly this how people are actually feeling the pandemic was great for that. So we asked each other, how are you and we actually got real answers. And that is carrying on even though it's a year later, I was carrying on with the fountain podcast, and I love that.
Darrell Etherington 1:25
So this week, we spoke to a Cathy Hannah, who is a co founder at dandelion energy. So Daniella energy does geothermal energy, which I had like a vague understanding of when we went into this episode, but I was
Jordan Crook 1:38
an expert on it. So sure, I felt Yeah,
Darrell Etherington 1:41
Jordan consults in that industry. She did a great job of telling us, you know, all about kind of the business she's in and why this is the time to be in it. And also, you know, we got into her background, which includes stints at Google and at Google X, where she spent many years and worked on a lot of kind of like those moonshot projects. Right? So it's, it's a really interesting perspective. And it's one that I think is unique in our set of conversations so far in that, you know, it comes from a place of someone who is doing really exciting, interesting things, one of the biggest companies, you know, one of the most well capitalized companies in the world. Yeah. So and, and yet still making the decision like, hey, I want to leave and do this thing on my own, because I think it's worth doing.
Jordan Crook 2:29
It goes to show how much timing and like your life experiences goes into starting a company. And I think origin stories is one of the best pieces of learning about what a company can actually be is figuring out where it came from. And she did a great job explaining that so
Darrell Etherington 2:43
so here it is, this is our conversation with Kathy hi noon from dandy lion energy.
We're joined today by Kathy Hanoun, who is co founder at dandy lion, which does geothermal energy for your home. So welcome, Kathy.
Kathy Hannun 3:06
Thank you so much.
Darrell Etherington 3:07
Great to have you. Great to have you.
Jordan Crook 3:09
We've already gone over my head, by the way. So
Darrell Etherington 3:12
just
Jordan Crook 3:14
already way over my head. Well, let's
Darrell Etherington 3:17
get started there that because I mean, I have a friend who's like using geothermal to power their house in Prince Edward county out here in cold Ontario. But so he's told me a little bit, but I don't know that much.
Jordan Crook 3:32
being really modest. He's like a science whiz. And I literally know that is not true. Please, most people
Kathy Hannun 3:38
don't know that much about geothermal heating and cooling. So when you put solar on a house, you're substituting grid electricity for electricity from the sun, like we're pretty familiar with that. What I think a lot of people don't think about is that for many houses, certainly throughout Canada and other cold places like the Northeast us the Midwest, us a lot most of the energy, like the huge majority of energy used in homes doesn't come from the grid to begin with. It comes from fuels that are used for heating, like fuel oil, propane, or natural gas. And so even when you put solar on your house, you're still using those fossil fuels to do the majority of your energy in the home for heating. What dandelion does is we actually install what's called a geothermal heat pump that harvests renewable energy from the ground to provide heating to your home. These heat pumps like all heat pumps run on electricity, but that electricity is just used to move renewable heat from one place to another. So they're actually very inexpensive to run. And it's a great way to just get too much less emissions coming from heating buildings.
Darrell Etherington 4:51
I am curious like so what if you mentioned you're in Canada it's more viable or or can be effective there. Like doesn't matter kind of kind of the the climate or the the Yeah, like the local weather, or does that affect it at all?
Kathy Hannun 5:09
The beauty of geothermal is that because the system, so it basically looks like a furnace in your house that sits where your furnace used to be. And then that heat pump is connected to ground loops, which are plastic pipes buried under the yard. And because those ground loops are under the ground in your yard, they're not really affected by the outdoor air temperature. So when you get deep enough, the ground is kind of the same temperature year round doesn't matter what temperature it is outside. And that's where that system is drawing heat from. So the reason it works really well in cold climates, is that it is isolated from the weather. So you're able to pull heat from a relatively warm place the ground, even when it's very cold. So it's not that it wouldn't work in a mild climate, it would technically work, it's just going to be less advantageous, because you just don't need that much heating to begin with. And it's easier to get if it's not that cold out. Like you could pull it from the air, for example, using an air source heat pump.
Jordan Crook 6:09
Can you talk to us a little bit about like, how you like install or scale? Like, what's the distribution on something like this? Because it does seem relatively like intensive to be getting into the ground under someone's home?
Darrell Etherington 6:22
Yeah, and how deep Do you have to go right, so don't use the deep?
Kathy Hannun 6:25
Yeah, so we go 300 to 500 feet deep,
Jordan Crook 6:28
that's so deep. That's like a really long way,
Kathy Hannun 6:31
I will clarify that we're not going under the home, but next to the home, so in the yard. So that's slightly simpler. But still, still it is quite an undertaking. And when we launched the company, we recognize that operational complexity and we thought, you know, let's be a technology company, let's make a heat pump, we'll make all the tools to do the design, like the software analysis that you have to do to know how much ground loop to put in how big your heat pump needs to be all of that. And we'll provide it as a service to hv AC companies and drillers that are already out there so that they can do this. It was a nice vision, it clearly failed immediately. You know, like it was just Unfortunately, the industry was so new. And so
Jordan Crook 7:21
was it hard to just sell through them? Like were they just not pushing it hard enough? Is that what it was like? Because you have this middleman who is used to like all the existing relationships. So that
Kathy Hannun 7:30
was definitely a problem. So the first problem, which you've just mentioned, is we want to sell this product on savings. So our value proposition is geothermal heat pumps are so inexpensive to run, because they're so efficient, that even if you pay more upfront, you're gonna make that money back really quickly, like all renewable energy, right, that's tends to be the proposition. And so we wanted to sell on savings. Like, look, if you switch from fuel oil to this, you're gonna come out ahead. But that's just not how the HVC industry tends to sell things they sell on features that so that was Problem number one is just like the sales model we we wanted was not natural, or just not an easy fit. Problem number two is just like we had very limited control over the customer experience, because we were having other other companies go on to people's yards into people's houses. And we have very little control at the end of the day over how those interactions went, especially when we were such a small company, right. And Problem number three, I would say is just like we couldn't learn very quickly, because if something goes wrong, and it's not your company, or your people that have done the work, you're at the mercy of sort of a game of telephone, and it was not a very fun game of telephone, to say the least. So
Darrell Etherington 8:46
something goes wrong. The customers like, I hate this, and you have no idea why because
Kathy Hannun 8:52
because it's like a blame game, you know, to some extent. And so, we we learned really quickly after launching, you know, if we're gonna actually do this, we actually have to get in to the business of having warehouses and installers and drillers and feet on the ground, very operationally complex, not what we wanted to do, but what it looked like it would take to make the company work. So we made the decision
Jordan Crook 9:18
to switch did that mean that you also had to like fundraise pretty quickly because that definitely changes the like cost model of the company. Like, you know, once the decision is made, it's like, okay, our runway is different. Our operation is completely different. Like what did that mean for you guys practice?
Kathy Hannun 9:36
Absolutely did it mean it meant that we would need more capital? And it also meant that our pitch would be a little in some ways a little more difficult, but I think you know, one thing that helps us is that even though when you imagine like okay, we need drill rigs and warehouses and installers, it is certainly like way above and beyond. Whether Typical Silicon Valley startup would need However, when you look at the actual economics of the business, the capital required is actually a very, it's a very de minimis amount compared to the revenue that capital can generate. So the business fundamentals were still fine. It still worked. It was just about like, retooling the story and our own honestly, just like our own coming to terms with the type of company that we had started and what it would require of us, right.
Darrell Etherington 10:29
Yeah. Yeah, that makes sense. Because it would we, you know, as long as it's still there, as long as the metrics are still venture bankable, I think you're probably like, Okay, good. This is good. Because otherwise, you don't want to be all of a sudden, I'm in a totally like, this isn't the type of industry that I wanted to be in at. All right. But I mean, I want to get back to an AI. This is great. But I would like to go further back and talk about your your founding, because we didn't address that. But like,
Unknown Speaker 10:57
that's what the bad guys is about?
Darrell Etherington 10:58
Well, it's good. It's good to flip it around that way and go backwards. But like, yeah, so it sounds like you were you had a very different idea when you started out. Right. And and I would love to talk about like what you were doing before that that led you to this conclusion, too, right? Because I know, you spent a lot of time at Google X, which is really interesting. So can you can you talk us through kind of those early days and how you got interested in this to begin with?
Kathy Hannun 11:21
Yeah, absolutely. So you know, my first the first project I led at Google X was called fog corn. And it was a attempt to pull co2 out of seawater, combine it with renewable hydrogen, to make carbon neutral fuels. And that sounds,
Unknown Speaker 11:40
you know,
Jordan Crook 11:41
complicated.
Darrell Etherington 11:43
That's, that's x.
Kathy Hannun 11:46
We did do it. Like, literally, we went to the sea and got like, a container of seawater and brought it back to the lab and extracted co2 from it and combined it with hydrogen and made methanol. So like, the technology works, it does, it was just certainly the crux of the problem was making it work cost effectively. And we after, you know, about a few years of trying to find any avenue to doing that we concluded, you know, and then nearish term, given the given the level of investment this would require, we're just not, we don't we can't recommend that we go forward with this, because it's just so unlikely that we would end up with a fuel that we could sell commercially,
Jordan Crook 12:32
can I just chime in and ask like how that actually felt as a person, because you spend like years working on something and you realize, like, you get the point? Worse, you did it, like you actually achieved it. But then like, money gets in the way, right? Like, which is like the just a truth of life. But like, it has to you have to feel something in that moment, too. Right?
Kathy Hannun 12:54
Certainly, like you are the facts and the reality that's coming out of our investigation and our experiments are clouding this. What was such a bright and exciting vision that we could be the ones to make sci fi all you know, like, how amazing would that have been? So certainly, yes, it was disappointing to have reality step in and tell us Nope, not today. But on the other hand, I think at that time in my career, I was still, I was just so excited to even be at x getting to work on something like C fuel. And I was learning so much, and my team was so great. And I just how, how special is it to have a job like that? Right, especially for, for me at that time, like I I didn't necessarily feel that I deserved that job. You know, I like had been, there should certainly been some luck, in addition to some hard work on my part to get there. And so I was really, still reveling in that a little bit to be honest, and just appreciating everything I was learning, even if it led to this negative conclusion that No, probably not, in terms of seafield itself. I was though ready to do work that actually translated to the real world. Like I think at that time, in my career, I had been at x for about five years, and I had been mostly doing work, like what I described where we were evaluating ideas, and just by the very nature of what X is, almost all of them aren't going to work. And you're just like going after ideas that are unlikely to work. But if they do, it could be amazing. And I was just ready to like, take an idea. And actually, I wanted it, I wanted to implement it. And that's really when geothermal heat pumps came to my attention it was through Google will have these like, basically, email lists that at least at that time, at least at that time, where you could sign up if you were just interested in different things. So there's like one for parents at Google and one for like, Googlers. Who ski, I'm guessing I don't know if that's real, really one, but it probably is. And there was one that was about people who are interested in energy. And so I was on that one. And a software engineer based in the New York office, wrote this extremely long email to that list, about why geothermal heat pumps were the number one thing that the US could invest in, that would make the biggest and most profound difference to the US energy future. It's like this very lofty, but like, well researched, and like, clearly an expert had wrote it, but the claims that was making seemed very large, so it piqued my interest, especially since my job was to find good opportunities and energy. So it's like, okay, maybe I will learn more about these geothermal heat pumps. And that's what kind of set me on my path.
Darrell Etherington 16:01
That's amazing. It's like you don't hear that much about it. But it is I experienced they were it was not to that degree. But there were similar things. In my brief time at Apple, and it's, it's very interesting when that happens near like, oh, like, there's like a sort of like, a, it's almost like, feels academic, right? Like, it's like a ship. There's the sharing of ideas in a forum where people recognize like, Oh, you know, we were all doing good work daily. And will we have like our own focuses that we're passionate about, but we're also all fairly intelligent people. And we have these other things we're passionate about and interested in? why not share that with this group? Right. And I think that's one of the the bigger things, the nicer things about some of the large technology companies that you don't actually hear that much about, on the outside on the day to day, right. And it kind of generate amazing things like, like, yeah, people starting their own companies and trying to make these ideas real. So that's really cool. But yeah, so from there, you were just like, I gotta go do this, or,
Kathy Hannun 17:03
well, it wasn't that fast. I started, this email came in and I like started my journey of learning what geothermal was, while I was still working on fog, corn. So this all happened before we wrapped up that project. So it was a slow burn, you know, I was just like, trying to learn more about it, trying to understand what about, you know, I met Bob, the guy that wrote that email he To this day, he's one of the most, he's left Google Now. And he's just one of the most important advocates for geothermal technology. He's done really amazing work in New York. But I met with him and just like, really tried to parse what, what in this email seemed true to me. Like what, which of it, which parts of it seemed real? And then was this actually technology play? Right? Because it could be, you know, x is always looking for, like, what could we do? What businesses could we start, but they have to be technology businesses, and it's never really clear at the beginning, if that's the right tool, but it I mean, unlike most ideas were the more I would look into them, the more it would become clear all the reasons that it probably, you know why it wasn't a thing. This one, it just I got, I got pulled into it. I got swept up in it. It was like, the more I learned, the more it seemed like, all the things holding us back were superficial. And that was really exciting. And so when we decided not to continue with foghorn, I had this very obvious
Jordan Crook 18:32
bring
Kathy Hannun 18:32
to turn my attention to Yeah, it was like, Okay, well, I have some time now. So I can really go full speed ahead on geothermal heat pumps, and figuring out what we do there. You mentioned, like, when you were at x, feeling like a touch of maybe imposter syndrome, right. And like, you know,
Jordan Crook 18:52
I was, I was talking to someone recently about, like, what it takes to be a great founder. And there's like this weird mix of like, kind of like ego and narcissism to believe that you're the person to solve a problem, but also like humility, and kind of like paranoia, also, as well. And like, when you're, you know, you had come from x, where you were on this team at this massive Corporation, and you're about to, like, go off on your own, right, like, for the first time and like, do do it yourself. Like, can you talk about like, did you were you nervous? Or were you just like, more, so excited that you had found the right problem for you to solve or, like, Where was your head?
Kathy Hannun 19:26
Yeah, I was really nervous. And I was I was excited about the problem like i i think it's just rare to find something that isn't a huge market, it could have a huge impact. And the incentives were aligned so like, you can really, if you can really offer a renewable energy project product that cost less than fuel fuel, and yeah, I don't know. There's just a lot of elements of it. That seemed great to me. But yeah, I did not know how to be like, I didn't really have that many examples of founders in my life. I didn't, I was very comfortable at Google. I knew everyone I like knew how to get things done there. I was in a sort of like in my comfort zone. And I was very aware that stepping out of that comfort zone would be really hard. And it wasn't clear to me, here's the thing, it's like, I knew in my heart of hearts, I was going to do it. Because if you have the opportunity to start a company you were really believing in and you get to spin it out of Google X. It's just like, I, I knew I wanted to be the type of person that would do that. Yeah. But then when I actually thought about, that meant for me, I was a little apprehensive as well. But to your comment, I think it's true. Like, I think there is a mix of humility, and ego. And I relate to that a lot. Like I think for me, I have a I have a core belief that I can, I can pretty much go after any problem that I set my mind to, like I if I'm going to be really honest with you. I feel like, Yes, I could. I don't, I don't see a lot of limits to like, what types of problems I can go after, or what projects I can try to undertake. But I also don't feel like that's unique to me, I feel like most people, or at least like a lot of people could do that as well. I think a lot of what holds us back is just like that fear, you know, but what when you listen to a lot of founders stories they're like, and then I just went to the library, and I learned about how to do XYZ thing. And then I like, started doing it, you know, and I think I think in fact, it's kind of easy to become an expert at one level, in almost any topic, because so few people are focused on for example, geothermal heat pumps, right, like, there just aren't that many of us, it's a very small pond. So if you spend all your time obsessed with that, you can get up to speed fairly quickly, which isn't to say, I'm not constantly learning every day, and like it does take a lot longer to become a deep expert. But I think you can learn a lot to to have an impact very quickly. Well, there's
Jordan Crook 22:20
two sides of the coin, right? Because you have to be an expert in geothermal energy, but you also have to learn how to be an expert, as leader of a company, right? Like a business expert. And those are two, probably, I would assume very different things.
Kathy Hannun 22:35
I'm so glad you raised that, can you be the bridge that connects the different stakeholders, like that's kind of what leadership is, to me is like, you know, what I, what I feel I brought to geothermal aren't to dandelion, it wasn't that I was ever going to be the most, you know, the deepest geothermal expert, or like, the number one, you know, like, even co founder, right, by any stretch of the imagination, it was just like, I was a person that was willing to go in front of VCs and make this case and connect with other talented people, I could bring in with the company and know enough about geothermal to know what to focus all on. And it's like that combination. So it's like, I think one of the hard things about being a founder is that I've just constantly felt out of my depth in like, every topic. For the past four years, I've been doing this, but but then you bring the right person in who is an expert, and you build the team that way. And you're sort of you you gain momentum as you go.
Jordan Crook 23:43
And I think that's like an important thing to share also, just with other founders, because I think and not just founders, but just people I think everyone experiences some level of imposter syndrome on a regular basis, and just like, pushing it away, and and being willing to, like ask questions that you don't know the answer to, right. Like those two things are like that, that can really stop someone success. But if you're willing to ask about what you don't know, and you're willing to say, like, no, I, I've been a TechCrunch for 10 years, and I feel imposter syndrome every day still, you know,
Darrell Etherington 24:15
you seem to have a confidence that underlies it, right? So you like Kenny, like, fall back on that and be like, Well, you know what, like, I know that if I dedicate myself to it, I'll be able to do it. Like, it seems like you have that pretty unflaggingly or is that not the case? Do you have like, plenty of moments of self doubt and like, well, maybe I can't do this or or is it more like no, I know, like, this is the type of person I am and if I if I focus on this area, like I can get through it.
Kathy Hannun 24:42
I do feel like if I focus on it, I can get through it. But I think I've come to that understanding through practice and in small ways to it's like when I was a master student, like taking a class that was too hard for me I perceived it to be too hard for me. And then like getting by, you know, and it's like, you just put yourself in enough situations where you're in the deep end. And then you realize, like you never drown like you, you find a way out. And I think you do practice that just as much as you would practice anything. And so now, when I'm thrust into that deep end, I'm not panicked. And I think that's, that's really like so much of what it is. It's just like, Can you keep your wits about you and not panic. But yeah, I was at a board meeting for dandelion yesterday. And I was just marveling at, like, at this point in the company's life. So many of the people around the table are so much so accomplished, like, can speak about some of the deals we're doing or the issues we're facing with so much expertise and wisdom. And it really does feel beyond like they are they're more experienced, or more sort of developed in those areas than I am yet. But it doesn't make me feel bad. it like it's valid, it's validating away, in a way because those people would not be spending any time thinking about geothermal heat pumps. If it were not for me, right, you know, and so it's like, I feel, I feel like overtime, yes, I want to get better all the time. But I'm comfortable with the fact that I would rather have the ability to attract the people better than I am at any one thing to the problems, I think are important.
Darrell Etherington 26:35
If you're listening to found, you're probably already super interested in startups, and the overall startup ecosystem, so we've got a great deal for you, we're going to offer you 50% off either a one year or a two year subscription to extra crunch. extra crunch is techcrunch's premium product offering. And when you go there, you'll get deep dive interviews with some of the top founders in the industry, who get market maps on specific vertical goals, some of the most exciting areas of growth and startup land. You'll also get surveys of some of the top VCs in different areas, including different geographies. So you can subscribe to extra crunch at extra crunch calm, that's probably the easiest way. Or if you're already on TechCrunch, follow the links for extra crunch. And you'll get a prompt to subscribe and then just enter that code that's found the name of this podcast during checkout and you'll get 50% off on either a one year or a two year subscription. It's like Okay, look, this this thing, this whole thing, all this focus I brought all these intelligent people are here working on the problem because of me, right? And maybe they're better me than in this one area. But like, the whole reason they're in the room. That's really is like I never thought of it that way. But that's a great inspiration.
Jordan Crook 27:50
Yeah, it's like the ability like to understand that you don't have to be the best at everything if you're the best at getting the best. Right? Like That is what where your confidence can come from? Yeah, right. Like, I love that.
Darrell Etherington 28:05
Yeah. This brings like, this brings us kind of back to where we took the D rail off. Because I do want to hear about then how you handle these challenges, like like, specifically around realizing this isn't the way we're gonna go like, was that? What was that decision point? You know, we did? Did you have to? How did that go with the board? How did that go with us in
Jordan Crook 28:27
the room? Like what you know, there was obviously a moment where you say, Okay, this is where we're going, like, what what was that moment?
Kathy Hannun 28:34
Yeah, well, that moment, it's, it's almost cliche to tell you what it was exactly like because it so happened, that I was literally climbing Mount Shasta with my husband, or maybe it was my I think my dad and my husband. So I was like literally climbing a mountain. Not to make the metaphor too, on the nose. But I was. And then Dan Yates, who is such an important mentor to me and was an is chairman of our board. He and I had been sort of grappling with this decision point for the last few weeks before this, but he gives me this call, and I see it from him. And it comes through because you get pretty good cell coverage on mountains, as it turns out, and so I answered it, because, you know, it was like an important time for the company. So we were having basically we I was climbing a mountain in real life. And we were having this conversation about like, we both kind of knew what needed to be done. We just had to call it and we just decided on that call. Yes, we are going to hire installers. We're gonna start installing heat pumps ourselves. We're gonna like, invest in a warehouse. We're gonna do it. So we talked about a few of the next steps that that would entail and sort of like how do you even get started with that? You know, there aren't there's not this huge committee. Have geothermal installers out there, right? So we're gonna have to like, hire people and train them how to do this. And yeah, it was just going to be an undertaking. So we made the decision. It was a July, it was July, I think July 2018. And we we started looking for people and
Jordan Crook 30:21
how did you prioritize that list? Right when you talk about it like, Okay, I need a warehouse. Now. I need like to figure out what
Darrell Etherington 30:30
installers looks like you need one, and then I can do the other. It's like,
Jordan Crook 30:34
exactly. So like, yeah, and like, how do you? Yeah, no, it's
Kathy Hannun 30:37
so true. I mean, what we did was, we tried to borrow the playbook as much as we could from solar, because solar companies, you know, often have some indoor or sorry, in house installation capacity as well, Solar City dead. sunrun has a mixed model, but they certainly have some. And so we found somebody who had experience managing a warehouse for I think Solar City, and brought them in, and then that person helped us just set up sort of the equivalent structure for for our business, that did come with some downsides. So like, that was a shortcut that was like, give us a color by numbers, version of this, you don't have to figure everything out from scratch. But of course, like not only did we inherit the good practices, we also inherited the bad practices, or the ones that don't translate well to geothermal. So we borrowed the playbook and then spent more than a year trying to like edit the playbook and figure out what actually could be transferred, and then what we had to think through ourselves. So it was a big, it was a big lift, but we kind of knew that it would be and I think I can say without a doubt now that if we hadn't done it, we would not exist as a company today, like I am positive, it was existentially important that we made the switch.
Darrell Etherington 32:08
And at that time, was it was it did you feel at all like, like you had some times past, like at x where you were like, you know what, like, I thought this was addressable in this way, and that it would scale in this way. But maybe in practice, it won't like what did that doubt ever entered into it? Or did you kind of know like, no, there's a way forward, we just need to figure it out.
Kathy Hannun 32:30
I know that geothermal can be scaled, and it can work, and it can be cheaper. Like I feel very confident in that. And I think all of my, all of my doubt that has existed in the past has been, will dandelion be able to figure this out and prove this in time? Right? It's like, I know that it can be done. But with as with any startup that's venture funded, there's a clock. And so it's like, yeah, I think fail if if failure were to happen for us, it wouldn't be because of a fundamental problem with geothermal, it would be because there was some misstep that costs us too much time. And so we never got to prove that we could, you know, get it to be on the trajectory that I believe that is possible. But luckily, like at this stage of the company, you know, are a little bit farther along, like I think in the early days of a company, that clock is so fast.
Jordan Crook 33:28
And speaking of the clock, like you said, like okay, it took us a year to kind of really iron out that that process. So 2018 to 2019. Summer to summer, you're going through that. Are you also fundraising at the same time? And like what can you tell us like a little bit about how those conversations were going like and? And the same, the same premise.
Darrell Etherington 33:52
Added some time to the clock, right. Like you have your your series d? Which witnesses out? Yeah, you will be on the publicly announced like, the $30 million, Series B. So yeah, fundraising, but
Kathy Hannun 34:09
this is the it's like right after you raise around, it's like this, this moment of calm, right? Because you're, it's like, you're at the beginning where you have all of these. Yeah, you have your plans that are well laid, and you have the funding to do it. And then you're like, Okay, let's execute. You haven't yet. Yeah, everything. It's a nice place to be. But to your question of like, what was that fundraising like? So we did raise around in early 2018. It was a very difficult round for me. And I think there are many factors that contributed to that. One I would say not to be underestimated is just fundraising is so hard for almost everyone, and especially when you're not used to it. I think it like feels even harder. So the fact that was interesting. Yeah, I think so to like the fact it was an early round. It's like, of course, it was really hard. But I was also on another kind of clock. So I was pregnant, and I was raising, trying to close the round before I gave birth. And like, that was stressful. And then also, it was in this period where we add shown market demand. But we had a lot to figure out about the model, like it was kind of in flux a little bit like we've been talking about. It's already such a weird business, right? Like venture capitalists, none of them are like, oh, I've been looking for a geothermal startup. So right, you know, so you're already,
Jordan Crook 35:38
but a lot of them are piqued by the idea, at least in my experience, or they their attention gets piqued, with something that they know less about than something that they know a lot about. Right. So like, that does feel like a little bit of an advantage. But like, when you're in that in those funding talks, which I assume took months, can you share with other founders who are listening in like, what what did you feel like the ratio was from kind of like a good response, or a byte to maybe no response or a negative response from VCs? Because I think a lot of founders go in and they click, everybody's gonna love this, you know? And I don't think that's the case for most founders.
Kathy Hannun 36:19
I'm trying to remember back then, but it was probably something like 80% positive non answer, which actually was a no.
Jordan Crook 36:30
Yeah. Which is frustrating, because you're like, emotionally feeling like, Oh, that was positive, and then you don't hear back. It's so annoying.
Kathy Hannun 36:40
Maybe like 10% just like, nope, too, out too far outside of our, you know, purview. And then there were a small, very small number that dug in, and like really did seem like they were interested to learn more. And I do think you're right, that like people like to learn. So Oh, especially we were from x. So I think like the combination of being from x and being geothermal, but it's like, in so it was an advantage. It opened doors, it gave us credibility that we wouldn't have had. But it also caused us to have a lot of conversations with people who like just wanted to learn, right, like we were educating them, that was our role. They didn't actually want to like,
Jordan Crook 37:24
Yeah, come in.
Kathy Hannun 37:25
And that was frustrating, because you know, especially in the early days, as the CEO is trying to run the company, which is a hard company to run, and all of them are right. So I'm not saying he was different than anyone, but like, and trying and trying to have a million conversations with all of these investors, it's just, it's very hard. And, yeah, so you
Jordan Crook 37:53
have a lot of different hats to wear, right? Because you're like recruiting, you're trying to solve like long term strategy issues, you're doing like the day to day stuff that you need to do just to keep your team connected to you. And then you're also going out and like fundraising and kind of like spreading yourself so thin.
Darrell Etherington 38:09
But it's interesting, too, that you bring up like, if you go especially in like, you know, frontier tech or whatever, like, like newer areas, like you can find that people are, are, like you said, and I don't want to say that. I don't know that this is intentional, but I think it is, but like, people are using you as due diligence for free. You know, because they're like, well, I don't, I just need, I'm going to take this meeting, because I really want to find out about this thing. And I have no intention of putting a check in but I'm gonna make it seem like, that's the way that this may go. Right. I
Kathy Hannun 38:42
agree with you. That's exactly what's happening. But I relate to it from my experience at x when I was the one parsing through all the ideas to try to find the good ones. And it's like, you do, you do need to be educated by the market. And like, perhaps, I mean, there's always this, like, small chance that the meeting could have gone such that it did turn into a check. I just think I did have one group of ambassadors or like one team that met with me, and explicitly said at the end, oh, like this is too outside of our scope. We were just curious to learn more like they literally said those words. And I still remember it so so angry. I was like You made me come all the way here and like wasted day. And you're just gonna tell like it just felt like so disrespectful.
Jordan Crook 39:35
It wouldn't have if they did it at the beginning of the meeting, or like while they were planning it and been like, Hey, listen, this feels way outside of our scope, but we would love to learn more from you. And maybe we can build a connection for something later down the road or whatever. Like that's much more respectful.
Kathy Hannun 39:50
But no, it was like literally at the end that they said that and so and I do think over, you know, over the lifetime of the company The interactions have become way more high quality, like, I had so many more disrespectful and just wasting my time interactions at the beginning. And that makes sense to me to like, they just, I don't I don't think it's good, but I get it. It's like, once your company has proven enough, then people use your time better, and you're able to screen better, right? You're like, not as desperate. So
Jordan Crook 40:26
yeah, those are hard days for sure. From like, the you perspective versus then like how other people were treating your or receiving you. But like on your end, you raise that very difficult round, beginning of 2018. And then you've just raised this round. Like, what what are your biggest kind of like takeaways like what have you learned, as someone like just in the process of funding generically speaking, and pitching and talking to investors? Like, what have you learned?
Kathy Hannun 40:56
I have a lot of thoughts of this about this, I think one thing that's been really different is talking about how now I just have high quality people around the table. Just that very fact alone makes it infinitely easier to raise money, because like now, any potential Ambassador can see the talent that's devoting so much of their time to the idea. And that gives the idea so much more credibility than anything I could say in any presentation. So that probably is the number one change. But also, I think I've just learned a lot about what makes an idea investable or attractive to a venture capitalist, because going into it, I think, I just didn't, I had never had an occasion to really think about that question in my life, you know. But now I can be more strategic with like, how I tell the story. And I know, I know, investors will be interested in what's the true market size helped me believe that that's really the true market, and you're not exaggerating? How will we build a moat? Right, like the defensibility? And what does that look like over time? Let, and then of course, like diving, I think one of one of the other nice things about being farther along is we have more data on what is the customer acquisition cost? What is the margin on each job? You know, like, how do we see that developing over time? And how has it developed over time? So like, I can just, I think I have, certainly I have a lot more learning to do, you know, I won't, I don't think I'm I'm not quite as good at pitching as I would like to be eventually. But I've come such a far, far away just from being more thoughtful about what makes an investment attractive. What are other attractive companies, and why are they attractive? And how do I apply some of those concepts to geothermal heating for homes, which is
Jordan Crook 43:09
you don't strike me as you don't strike me as someone who's ever done really learning to be honest, which I think is also like a trait like a quality of a founder that just has to be successful founders.
Darrell Etherington 43:20
Yeah. But I do think I think it's, I have a hypothetical, which is like, would you would you rather know what you know, now and go back to early stage pitching, or continue on later stage, again, like x anything to do with actually what happens with companies and whatever? Because I'm just curious, because, you know, you said a lot of that stuff you weren't aware. But on the other hand, when you're pitching at early stage, you're pitching on the idea. Right? And you don't Yeah, it's just different circumstances, the numbers don't necessarily have to add up them because there are no numbers. Right. So it's, it's kind of like more
Jordan Crook 43:56
art than math.
Kathy Hannun 43:57
Yeah, with the early stage, it's making an impression and making yourself look like somebody to take a bet on. And so I do think market size is still really important and showing a trend in the industry, like for us. Even even compared to four years ago. The momentum around electrification is, is amazing. Like we're seeing San Francisco ban new gas hookups Denver, I think recently banned new gas hookups, you know, like, just, yeah, the moment Biden got elected, like, there have been so many world things that have happened that have made our company look like it's at the right place at the right time, right, we're solving a problem that everyone is now interested in solving. So that's, that's amazing. And I think helps. It helps to have that in an early stage. If you can just show like this is a wave that's happening independent of my company, but here's why if this works, we will catch this wave and then make sure the market size is big enough, because it's Yeah, you like, if you're limited by market size, it's just gonna be a really hard path. And then I think the reason the team Oh, I was just gonna say like, I think the reason everyone's like, oh, the team matters the team matters, is because it really does like I think, if certainly if I were going to put money on an idea, succeeding or failing, that's the first thing I would look at to like, do I trust that this person will give it the best shot that it has? And I think like, as a first time founder, that was certainly a hard thing for me, because I didn't have a track record. And you know, I was an unknown. So I had x, which was helpful, like, I think it would have been much harder to fundraise without having spun out of x. But I think that's just a hard, a hard thing that incubators help with like a Y Combinator stamp of approval. Like, I think that's a lot of what it gets you.
Darrell Etherington 46:00
Yeah, you mentioned to like, you know, like that, the having the people around the table. And I think that the, the outside expertise, no matter what form it takes, as long as it's like, it held in high regard, generally, like is such a huge thing that especially a lot of early stage, companies just don't have or don't know, to have, right, like, you think, Oh, my idea is so great. It's gonna sell itself. And I could just walk in and be like,
Jordan Crook 46:25
here it is, Domino thing, like getting that first domino to fall, I think is really hard. But it like, you know, once you can get it, and you get that, you know, like five stamps of these people who have trust and credibility, things go so differently from that point on.
Darrell Etherington 46:42
Right? Well, I think we're actually almost out of time. But I think that's a good, natural place to end this. Anyway, I think it's been really fantastic talking to you, Kathy, I, I'm so thrilled that you came on and gave us this. You're very open with your answers. And I think us and our audience will appreciate that. But yeah, thanks very much. Yeah. Thank you guys.
Kathy Hannun 47:04
It's been really it's been a fun conversation for me. And I don't often get to talk to people who are interested in these questions, you know, so it's, it's nice for me actually, to reflect on all of it and everything that's happened in the past four years. It's crazy.
Darrell Etherington 47:25
All right. So that was our chat with Kathy Hanoun from Danny Lyon energy. And Jordan, I don't know about you, but I'm already digging holes in my backyard, just to get to that sweet, sweet geothermal energy. And I'm gonna just pipe it right into my house. I think that's ours. I feel
Jordan Crook 47:38
warm and toasty, just thinking about it. No, I mean, I admittedly was not an expert at the beginning of the show. But I do feel like one now I felt like that was a really clear explanation of what exactly this industry is trying to do. And we got into the weeds on some of the kind of like pitfalls of it as well, and her approach and strategy in terms of scaling. So I had a blast. She's great. Kathy, Kathy wins.
Darrell Etherington 48:02
Kathy does win. And I really appreciated that she was willing to talk to us about you know, when the approach was not working quite as intended. And they had to make a pivot, and it was a considerable one in terms of their overall business model. But, you know, it appears to have worked out you know, they're fresh off of their recent funding. And, you know, now well in the midst of that kind of model, and it seems to be going well for them, so that's great.
Jordan Crook 48:26
Yeah. And she learned about that on a mountain. She She on a mountain she had to learn how to climb a mountain. That's right. So yeah, nada.
Darrell Etherington 48:40
Found is hosted by myself, TechCrunch news editor Darrell Etherington and TechCrunch managing editor Jordan crook we are produced and mixed by a shadow carnie and TechCrunch is audio products are managed by Henry pick event. Our guests this week was Kathy Hanoun, co founder and president of dandy lion energy. You can find us on Apple podcasts, Spotify, or wherever you get your podcast and on twitter@twitter.com slash bound. You can also email us at found@techcrunch.com. Thanks for listening, and we'll be back next week.