Greening one home at a time
Scott is a serial entrepreneur in the sustainability space, starting his first business years ago with an electric lawn mowing service. Now his latest start-up provides a line of fully organic, natural body care products for consumers in refillable bottles.
While his desire to provide all things green for your home is obvious, the software company that lies beneath all of these businesses is not.
I hope you enjoy this episode of Plastics Revolution with Scott Cooney of Pono Home and Pono Home Essentials.
Companies, Organisations and Products Mentioned in this Podcast:
Hosted by Tammy Ven Dange
Produced by Jonny Puskas
Theme Music by Joseph McDade
All Rights Reserved 2019
This transcript has been modified for clarity.
T: Tammy Ven Dange, Host
S: Scott Cooney, Founder of Pono Home and Pono Home Essentials
T: So, Scott, welcome to the show.
S: Thank you, Tammy
T: I’m actually here in Honolulu, Hawaii, and I’m so excited to have a chance to talk to you. I’ve done some research on your background, and I could see you’ve been a serial entrepreneur specifically in an environmentally conscious type business.
About Pono Home Essentials
T: I think the first company I’d like to start with, though, is the one that really drew me to you to begin with when I was doing my research about businesses I should speak to here while I was in Hawaii. And that is you’re refillable product collection, which I guess is called Pono Home Essentials?
S: Yes, that’s correct.
T: Do you want to talk about that a little bit more? And describe how that product line works?
S: Sure. Pono Home Essentials is a sort of a spin off from the company brand name, Pono Home, which we do energy efficiency, water efficiency, retrofits for homes. So, this was the natural evolution of it. And so, it became the essentials line for a green home – more or less. So, our whole business is about green homes and the green residential space.
S: We basically created a line of non-toxic products. We started with that and said everybody here wants something that doesn’t contain a bunch of carcinogenic compounds. Then we said, okay, we can make products. Can we figure out the packaging? So we decided to jump into the packaging and see if we could make it into a zero waste model. And so we attacked that and came up with a solution for that.
S: And then, we wanted it all locally sourced and as organic as possible. So, multiple tiers to the whole thing. But the packaging is a big part of how we pitch it and how it is sold and certainly a big part of what customers are most interested in these days.
T: Are you selling directly to customers or are you selling through wholesalers?
T: And how did you start off in terms of the market testing for the products?
S: We have a motto at Pono Home: Don’t make the perfect the enemy of the good.
S: And so we started off with a good product and moved on from there. And the journey towards the perfect product is never complete. So, we just keep trying to get better and better. We started off with a handful of products that we felt good about. We didn’t feel amazing about them, but we knew we could figure out how to put them in good packaging and get them out and try testing them with people. So, we started selling these eight ounce, aluminium bottles of shampoo and conditioner.
S: We found a supplier of this shampoo and conditioner – we didn’t even make it ourselves – that would sell us some bulk stuff.
S: So, we found that and started marketing it. And then I quickly moved on to other products because the quality was not amazing, but we had figured out at that point how we were gonna keep track of our inventory of everything from the product to the bottle to the caps, to the pumps, to everything.
So it was really necessary just to get started so that we could figure out how we were going to keep track all that stuff and build a system around that.
T: I think there’s a lot of discussion right now about the minimum viable product in terms of just getting it shipped as soon as you can.
T: So, you went private label with an existing company.
T: Where did you source the bottles from?
S: Well, we had a couple of different wholesalers that that basically make packaging materials that you can buy in bulk. So, we started buying what we could afford and that was the eight ounce aluminum bottles. And it was fine, and it worked for a little while. And then we quickly started just listening to customers – like what the customers want. And everybody consistently wanted bigger bottles. Some, we went to the 16 ounce bottle and that seems to be the perfect size for those products that we put in there.
T: When you talk about, “you went to customers” were you doing farmers markets? What were you doing?
S: Yeah, we were doing direct sales models where we had groups of friends getting together and talking about this stuff. We worked with some environmental groups, and we went to farmers markets to market this stuff.
S: Here – luckily we have one set of farmer’s markets run by two awesome ladies who are really good about vetting all the products before they go into the farmer’s market. Some farmer’s markets here, they’ll accept any vendor who will write a check. And so we steered clear of those farmer’s markets to get some authenticity in our customer base.
S: So, we went straight to these farmer’s markets that have only allowed you to be in it if you are a local food maker or a local grower. So, we went to those farmer’s markets first. And once we got into those, we started building a customer base and got a lot of people signed up for our newsletter and Instagram and stuff like that that way.
The challenges with reusable packaging
T: When you started the program, did you actually have the reusable bottles’ process already in the background? Where people actually showing up at the farmer’s market to refill their bottles or were they just replacing them or swapping them?.
S: Yeah. So we don’t actually refill on the spot for anybody. We don’t have that bulk model. That is one model. And a lot of people do ask about that. So I think there is a niche around that as well. And there are a handful of people here in Honolulu that have contacted us and are interested in starting that and doing it on the side. And I think that’s cool. I wish them luck. It’s different enough from our business that I want nothing to do.
T: Why did you decide to go down that route if people were asking for it?
S: Well, there’s a handful of stores here where you can refill things. More people will bring in their own bottles and you very filled with Dr. Bronner’s and other things in bulk. I just think that the point 0.1% of people who are willing and able and remember all the time to bring their own bottles and stuff like that is just a pretty small niche. And those are customers that are gonna do it themselves no matter what.
S: And so what I really wanted to focus on was the other 99% of people who are concerned about plastic, but are not of the mindset of bringing their own bags and bringing their own bottles and all this kind of stuff. And so instead we just sell the full product and then we buy the bottle back. So, it’s the milk man model from when I was a kid.
S: Here in the United States, we had a milk man that would leave milk on your front porch, and you would bring it in and then you’d leave the other bottle out and they would take the bottle away and they would clean it and refill it and whatever. It’s that model. So that’s all we’re doing.
S: What we had to figure out was if we can sell a package to somebody, and then that person brings a package back. What do we do? And so that was what we set out to solve that issue.
T: Were there any legislation or policy issues that prevented you from doing what you wanted to do with that?
S: There definitely are regulations here in the States, and I don’t know how they are in Australia, but there there’s definitely regulations with the FDA and the US Department of Agriculture and others around a lot of things. There’re labelling requirements and so there certain things you can say and certain things you can’t. There’re levels of cleanliness that are required in all sorts of things. We just had to dive deep.
S: Thankfully, I have somebody who is a self-described policy wonk, and she loves to dive into government regulation type stuff. So, thank God I have somebody like that on my team. So, she drove in and figured out what we needed to do. And then once we knew our rules, the game are clear then everybody can compete on those rules.
S: That’s what I love when regulations are nice and clear and easy, and we can figure it out and just go with it. And then we know that if we’re playing by the rules, and if somebody else is not playing by the rules, they’ll get violated. So it’s like, “Cool, we know where the boundaries of this football field are. We just go out and play.”
T: But in saying that, you’d also have some infrastructure you have to put in place to meet those requirements, which is a capital investment.
S: Indeed. Yeah.
T: Was it a big one or a small one in comparison to actually getting the product up and going?
S: In comparison to all the HR (human resources) time that we’ve had to put into it? No, is was a pretty small amount.
T: Okay. So once you understood the rules, it wasn’t that hard or that expensive to get that into place.
T: There is a huge movement, I know in Australia, for bulk buying and bulk replacement of different materials and especially those that come in single use or even larger types of containers for personal hygiene – like you were saying, shampoo, soaps and things like that. And he (Scott) gave me a chance to actually try out their mango lotion, which smells really nice.
New competition for Pono Home Essentials – maybe
T: I have a question regarding the competition right now, because there seems to be more and more businesses and even large businesses like Procter and Gamble and Loop and some of those bigger organisations with TerraCycle that are in the space now. And I don’t know how well it’s going in the US, but they just introduced the idea that they’re gonna do something in Australia soon. What’s it like in terms of competing against the big boys now that you’ve been in place for a while, and they’re just coming on?
S: They’re not here in Honolulu. They’re not here in Hawaii yet. And I think just the isolation of us out here in Hawaii is going to create some sort of a barrier. It’s gonna be a little harder to do business out here. Hawaii is just a very different place to do business. And I think that gives us a number of years to kind of work things out. So we don’t really have competition here locally.
S: But we are doing this on the mainland, of course, we do have to compete with all those guys who are doing this kind of stuff. Loop’s got a great model, and I support the whole effort. And I think, for me, the bottom line is that if we can get to a zero waste future, I’ll be stoked. I’m not worried about whether I become a millionaire doing this or not. I’m much more concerned that we rid the world of plastic globally around the world. I don’t care who succeeds. I just think that we all need to succeed on some level.
S: So that said, I actually directly reached out to TerraCycle and said, “Hey, look, I see Loop is doing their thing and that’s cool. I wish it much success. I would like to know how niche brands like ours can grow to a certain point. And if and when Loop becomes this global behemoth, how do we fit in? Do we carve out local niches or do we sell our customer base?”
S: What do we do with this global behemoth that’s gonna come in? They’re gonna fill everybody’s house in the United States with every product that people in the United States want, which is, you know, the stuff that they’re used to. Having the option to switch from Tide to Seventh Generation is a nice option for people. And if that exposes them to that in a zero waste way, I’m so supportive.
Local concern for sustainability?
T: What’s it like here in Honolulu with people’s interest in buying an alternative soap anyways? That might be healthier for the environment? Australia, I find is a very different marketplace, especially where I live, where people are very, very conscious of what they do now. Where I always find it interesting when I come back to Hawaii because it’s such a beautiful paradise, and yet it feels like the care factor is less than where I come from.
S: If you’re around this weekend, there’s a beach cleanup on the North Shore. There’s a beach called Kahuku. And if anybody is listening and wants to Google this, this is potentially the world’s dirtiest beach. It captures an amazing amount of the funnel from the Pacific Gyre, just from the currents and the way that the bay itself is shaped. And so it’s a beach here on the North Shore that every week is covered in just megatons of plastic.
S: It’s an insane thing. So, we’re doing a beach cleanup this weekend. We expect to take away 10 tons of plastic – at least five.
T: How often do they do the clean-up?
S: They do them pretty regularly. That’s the thing. It’s like you’ll do one, and within two weeks you’ll go back out there and you’ll be like, “Wow, this looks like a plastic beach.” It’s insane.
T: So when you talk about that particular beach and probably a lot of your beaches, that’s not necessarily all coming from Hawaii. But when I go where we’re staying near the harbour or the yacht club right now, that’s all coming from out of the storm water drain right in there. That’s all local. And it’s just filthy.
S: Yeah, it’s true.
T: Are Hawaiians – I’m not talking about native Hawaiians, but people that are actually residents here – are they actually as conscious as you are in terms of the environmental impacts of their actions?
S: Yeah. I think there’s a fairly high level of conscientiousness here around these issues, and it’s rising all the time. Every beach cleanup that we do, we tried to invite different groups. So we’ll try and get a corporate sponsor to come out like one of the banks here locally to bring a bunch of their employees so that we can reach out into different groups.
S: We get school kids to come out and do it. And as soon as somebody sees all this, you can’t unsee it. And so it changes your mindset quite a bit. You go back and you’re like, “Oh, I just can’t keep buying plastic. I got to figure out something.”
S: So the education has been going on. Two nonprofits here: Surfrider and Sustainable Coastlines have been both been doing this for years and years. And I think they’ve made a huge difference in terms of the local awareness of these things.
T: It’s still so interesting to me because once again, I feel like where I come from, it’s maybe ahead of the game – even in Australia. In the hotels, you must have tons of tourists just come through here every year. I’m still being offered plastic straws. I’m not even given a choice. They’re still giving me a plastic straw without me asking for it. They’re still giving me plastic utensils or cutlery without me asking for it. It just seems like it’s also an issue with the industries.
Challenges of changing the industries
S: Yeah, definitely. And within the place where most people live here in Oahu, I think you’re starting to see the locally owned restaurants typically going plastic free now. And it’s happened faster than you could possibly imagine, which is really great.
S: However, there are some local restaurants that are so dependent on plastic. There’s a local restaurant chain here. And not to throw anybody under the bus, but they serve everything in single use everything. They have been the number one lobbyist against all the plastic bans for years and years and years, refusing to switch their business model. And it’s because they set it up the cheapest way possible way back at the beginning, and then they got into this path dependency, and they just don’t see any other way to serve their food except to use this cheap plastic, single use plastic.
S: So it’s interesting. They actually just launched a plastic bag. That is unbelievable. It’s, for all their take-out stuff. They give you a plastic bag with all the plastic stuff in it to carry out with you. And the bag has a turtle on it, and the turtle has a bubble over its head and is saying, “Howzit?”
S: Not only is it like horrible cultural appropriation, but it’s also just right in your face. It’s a turtle who don’t like plastic. And, you know, here’s a plastic bag with that turtle.
T: They’re pushing it back.
S: Yeah. So it comes and goes. But I think that the majority of people and a lot of the locally owned restaurants are really into the zero waste stuff and all the straws have been replaced. And everywhere I go, it’s like, wow, paper straws, everything is compostable and it’s great. Waikiki is a whole different animal. And that place is all about single use convenience because that’s where all the tourists go. So, it’s a challenge.
S: So, we’re doing what we can to start where the soil is more fertile for this kind of stuff, which is where most people live here – downtown, Kakaʻako, all the other neighbourhoods. Waikiki is just going to have to be afterwards.
T: It’s still interesting to me as it as a tourist who actually does care about this thing. I can’t be one of the few people here. I did notice that some of the higher end hotels like the Sheraton were the ones that were more likely used the paper straw. Your business to me seems to be so appealing to people that just care about the environment in general, wherever people are.
Types of Customers for Pono Home Essentials
T: It seems to me that with this many tourists coming to Honolulu that you would have a great opportunity to be taking more people on this journey because you do have all these natural and organic ingredients that are Hawaiian, and you want to have these memories from when they were here and recognise you’re doing these things for the environment. What’s your percentage of business is in Hawaii compared to what you’re selling on the mainland right now?
S: Oh, we’re 90% here.
T: In Hawaii?
S: Yeah. We have two employees on the mainland, and they literally just started selling. So we’ve been in production and facilities and operation and just like training and all the things that you need to do to grow a brand.
S: Our two mainland folks are now starting to sell at markets and online and that sort of thing. But we’ve been in business here a year and a half doing this product line – five and a half years total. But yes, just way more here.
T: And as far as what you sell here in Hawaii. Is that mostly through the mail? Or is it actually done still through the farmers market model?
S: It’s most mostly through the mail. And then as I said, we started just started doing wholesale. So we just got into Down to Earth, which is our big natural grocer here. Tthey are in five locations and they’re an awesome partner. And they source everything local, organic as possible. They’re my grocery store. They’re amazing.
S: So we just got into there, and we’re doing our first store with them and scaling up to just produce enough for their five stores is gonna be like the next level of what we’re doing because they’re gonna blow through a lot of our products.
T: I bet. Can they also drop off the bottle off there at the grocery store?
S: We’re still figuring that out. So that that’s always been the challenge with the retail model – returning a bottle and having the bottle deposit is how do you collect those? And so we pay people for those bottles to get them back. Much like recycling sometimes has like five cents or whatever. Ours is a dollar. And so you can bring it back in and get the dollar back. So, we’re trying to figure that out with Down to Earth right now how that’s gonna work. But so far people have been mailing us their empties.
Return rates for Pono Home bottles?
T: What percentage of the bottles do you actually get back right now?
S: It’s a great question. Keep in mind that like a lot of bottles are still full. Right. So people buy like a 16 ounce lotion that’s gonna last them three or four months for a lot of people. So we have been selling for a year and a half, and I will say that out of the total number of bottles that we have put out into the world, we’ve probably gotten maybe 10% of them back out of. That other 90% – how many are still sitting in somebody’s shower waiting to come back or they’re empty and sitting in the cupboard and waiting to come back? We don’t know. So that’s this is the big unknown of what we’re doing.
T: And of that 10%, are they predominately just a few families or are does that 10% make up a huge population of people that are involved in this process?
S: It’s a good question. And I don’t have an answer for this. Ultimately in entrepreneurship, you just guess so much. You take the best information you have, and you try to make an educated guess. We’re still guessing on so many things.
T: Well, you’ve done a lot in a year and a half, considering you’re already in some of the major health food stores here. I mean, those are not small stores either.
T: I think when people think of a health food store in most places, the independent ones especially, they’re probably thinking of something that is not much bigger than this conference room – maybe a little bit bigger. Where we’re talking about something that’s like the size of a normal grocery store in some parts of Hawaii.
How big is the Pono Home team?
T: That’s amazing. How many employees do you have right now?
T: Twelve? And are they all working on the Essential line or do you actually have them working on the other products?
S: Oh, just on the other side. So our company, as I said, we green homes, we do light retrofitting. So, kind of like a green handyman service. We fix toilet leaks and change light bulbs or LEDs and shower heads and faucet fixtures and all that kind of stuff. So that’s the predominant number of people in our company. I think eight people work on that side and we have some people that kind of do a little bit of both like me.
T: So probably about four. And you said a two on the mainland at the moment.
S: Yeah, exactly.
T: Well, it’s still phenomenal growth for just a year and a half in this particular space. And congratulations on that.
T: I’m actually looking forward to seeing some of these organic natural options maybe in Australia at some point.
Scott’s first green business
T: Well, I went back and did some research on your background. It’s clear that you’ve been in this green conscious entrepreneurial space for a very long time. It’s not just a trend for you. It’s something you’ve been involved in for quite a while. And I can see that you’ve had quite a few businesses over that time. I think it’d be really interesting to hear about maybe your first business and how you got into that.
S: Sure. I’m definitely a lifer. Sustainability has always been my passion since high school. And I think back then I was like the hippie, granola kid that you know. I was a pretty small minority of the population.
S: So after school, I took a job just because I had school smarts, but no, like actual skills. And so I just needed to actually get some skills. And so I took a job. I worked at Merrill Lynch doing financial stuff and kind of using my MBA. And then I was moonlighting at Anheuser-Busch because my undergrad was in biology. And so I was doing biological testing in a beer lab at night and then doing financial spreadsheets during the day. It was kind of hilarious.
T: Very unusual mix of side hustle with a full time job.
S: So, during that whole time I was looking at these giant companies and how much waste there was and how lack of innovation was happening. And I just kept thinking of business ideas, and I still couldn’t come up with anything. So, at some point I was like, “God, I just gotta quit now. I’ve just gotta do my own thing. And how better to learn how to market and talk to customers and customer retention and business models and all that kind of stuff, then just to dive in.”
S: So I started the world’s simplest business, which was a what we call here in the States, a “mow and blow,” which is where you mows somebody’s land and you blow the clippings. So I started, uh, a company called Eco Mowers back in Salt Lake City back in 2004. And, that that company basically had electric lawn mowers, electric blowers, hedge trimmers, weed whackers, all the things.
S: And so I drove around. I put a tow hitch on my Saturn, which is a sedan, small car because it got good gas mileage. And I put a toe hitch on it and had a utility trailer. And I looked like the most world’s most ridiculous landscaping service pulling up in this tiny little red sedan with a tow hitch behind it with a bunch of black and decker electric lawn mowers on it. It looked absurd. And I’m sorry that I don’t have pictures from those days. Like I wish I had taken so much more documentation because at the time I was embarrassed. But now it’s like so good historical.
S: So anyway, that’s what I did. And it actually turned out to be a great business. It really helped me learn about green marketing and communications and customer retention and just how to listen to your customers and do the customer discovery. So that was my first company.
T: And are you originally from Salt Lake?
T: Florida? So from Florida to Salt Lake. And then how did you get to Hawaii?
S: I was in San Francisco working in a sustainability consulting firm. So, after I sold the Mow and Blow Company, and I actually sold it twice. And that’s a funny story if you ever want to get into it.
T: I’m happy to hear it now.
S: So, I was at the end of my rope. I was kind of done doing the job. My back was hurting.
S: I was like in my mid 20s and I was like, “I don’t understand how people do this work.” My back was hurting. I was being so whining and complaining about it. Some people, physical labour is what they do for their whole lives. And I was doing it for like three years, and I was like, “I’m done with this.”
S: So anyway, at the end of the three years I was trying to figure out my exit strategy, and this guy contacted me and he’s like, “Hey, have you thought about selling your business?”
S: And I was like, “Yeah, let’s talk.” It turned out, he was a guy who was running a similar company and was looking at franchising. And I think his idea was basically to buy out his competition. And at the time, I was the only other competition in the in the country that we knew of. So, he bought out my company, and he made me sign a five year non-compete clause. And I was fine with that because I never wanted to mow another person’s lawn or step in dog poop ever again.
S: I signed this thing and I sold him the company and he took over our operations in Salt Lake City. And about a year later, he shut them down, and I checked the non-compete clause and there wasn’t anything that said that I couldn’t do some marketing for somebody else. And this other guy contacted me and said, “Hey, these guys aren’t doing it anymore. Could you help me get it started?” And I was like, “sure.”
S: So, I went to my client list, and I called them and I said, “Do you still want service? Got a new guy.” And they said, “Yep.” So I sold the client list two years in a row which is kind of hilarious.
T: You noticed something that a lot of people would’ve missed. Right? Like you recognize that there is still some value in that old client list.
How did Scott land in Hawaii?
T: So you made it to Hawaii from San Francisco?
S: Yeah. I was on a sustainability consulting firm in San Francisco. I got laid off during the big recession back in 2008, and I met a girl on a dance floor while I was unemployed who happened to be on vacation from Honolulu. And she was the president of the Sustainability Association of Hawaii. And she was in San Francisco just literally on vacation. And we hit it off and just became good friends.
S: She convinced me that there was enough sustainability work that needed to be done out in Hawaii. That they needed people like me to come out here and do stuff like this. And, I think it’s one of those things you hear what you want to hear. And I wanted to hear that I was being recruited to Hawaii. So I came.
T: But did you have a job waiting for you when you got here?
T: So that means you probably started another business?
S: Yes, I did.
T: Anyone else would look for a job. But you actually started another business.
S: I did. I was already kind of thinking about it. I was playing around with some ideas. And so I said this idea that I was working on was a virtual kind of thing. So, I just decided to up and move and come out here and figure it out once I got here.
T: But Hawaii is not a cheap place to just do that.
S: No. But thankfully, I was in my thirties. I had no kids and had no rent to pay back in San Francisco anymore. And, it worked out. I had gotten a severance from my previous job when I got laid off and I came out here and just decided to do it.
T: So that’s two thousand eight?
Let’s talk about Pono Homes – the main business line
T: So about nine years now here in Hawaii. And we’ve been talking about the Pono Home Essentials line. Bu why don’t we talk about your main business, and how you really started that off? We just briefly chatted about it a few minutes ago. Why don’t we talk about that? Because that’s really how you were able probably to fund the Essential line, right?
S: Still. Yeah, it’s still paying for it. So Pono Home got started in 2013 as an idea around educating people and doing light retrofits for their homes and looking at everything from lighting to HVAC to plumbing and figuring out all these little things that people don’t tend to fix on their own or maintain on their own, which add up to higher electric and water consumption.
S: So something like super simple like ACs (air conditioning), you need to change your filter out pretty regularly, otherwise the filter gets clogged and then it gets harder for the device to move air through the system. Once that happens, it’s like moving the motor a lot more and you’re sucking a lot more electricity. And a lot of people just don’t do these simple maintenance things around their house.
S: After educating myself around this and then seeing every home I walked into needing sustainability work, I just decided that there could be a business model around it. So, I started this business to do exactly that.
S: And, you know, our whole economy is built on convenience, so we shouldn’t expect sustainability to be any different. And that’s where the Pono Home Essentials mail model of getting stuff through the mail and making it super easy or this Pono Home going into people’s homes and doing the job for them. That’s where it’s super convenient.
S: So Pono Home was set up to be this convenient green handyman service and just do everything for people and keep it at such a level that it was like cheap enough that it would pay for itself in less than two years. And we guarantee that, and we have been guaranteeing that for five years now. So now we have served over 12,000 homes.
S: Across three states. So we’re in Nevada, here in Hawaii, and we previously had a contract in California. So we’re in California for a little while, too. So we’ve greened over 12,000 homes.
S: The statistics are pretty mindblowing in terms of carbon and water and that sort of thing. I haven’t done the numbers for 2019 yet because it’s not the end of the year. but when I did it for 2018 and then extrapolated forward, we could be getting close to saving 200 million gallons of water per year. And that’s an annual per year kind of thing.
S: And with every home that we do we’re saving more and more. We have offset probably 15 to 20 million pounds of carbon pollution every year already, and that grows every single day.
So, doing energy efficiency and water efficiency is hands down the fastest, easiest way to tackle climate change. And, I recommend it for everybody.
T: How do you measure these things? You have such a wide range of services that you’re providing. I know they have smart meters to put on certain things, but it’s one thing to say that you have the potential to do it, it’s another thing to be able to track that we’ve actually done that.
S: Yeah, so we worked with some engineers at a third party consultancy, and had some calculations around what we expect energy savings to be. And so we looked at everything from very simple calculations around watts that are reduced to much more complex calculations like what the ground water temperature is when you pull it up and then you have to heat it to a certain level before it goes through a shower and then goes down a drain.
S: So we had and obviously why you outsource these kinds of things to people way smarter than you. But once we had verified calculations for everything that we install and do and maintain and that sort of thing, then it’s just plugging numbers in and being like, “okay, for every furnace that we do this for, every air conditioner we do that for, we can save this and we can check that.
T: Do you have customers actually confirming they’ve had a reduction in their, maybe not bills, because a lot of the cost electricity keeps going up, but are they able to come back to you and say, “Yeah, we can confirm that that the average use has gone down?”
S: Oh yeah. We have been guaranteeing that “our service pays for itself in less than two years or people get their money back” for five and a half years. And we’ve never had a single return.
T: Not one?
S: Not one.
T: That’s incredible.
S: Yeah. And we have case studies all over our website. Every documentation we’ve ever done has shown a decline. Some are lower and some are higher, but everything is in decline. We decline people’s utility bills 100% of the time. And that’s amazing.
Franchising versus Licensing
T: That is amazing. Now I think you’re doing this via franchise model. Is that right? Is that how you’re doing so many homes?
S: We were looking at franchising. Franchising is very difficult.
S: We just decided this year to not offer the franchise anymore. So what we’re doing is we’re actually offering a white label version of what we do through home efficiency and that’s on a website called homeefficiency.com.
S: And basically the idea is that people can get trained in our model and just go and call it whatever they want. They can call it Joe Bob’s Home Efficiency Service and it can be in Atlanta, Georgia. It doesn’t matter where it is.
S: Franchising is limited on a billion levels. And so it just became one of those things that once you put somebody through this rigamarole and qualify them and whatever and then they’re at the finish line, then they still have to read a 200 page document that’s legal-ese to sign and become a franchisee. And a lot of people don’t like that.
T: It’s also a stakeholder management issue.
S: Oh, my God.
T: Ha Ha!
S: So here we are. We decided to kibosh that. So, all of these 12,000 homes have been done in-house. Our own company has done all of those.
T: You must have people in Nevada.
S: Yeah, we have people on all the neighbouring islands here. So we have Big Island, Lanai, Molokai, Maui, Oahu and Hawaii. Huh. And then we have people in Las Vegas now.
T: To turn that into a licencing model instead is basically what you’re doing more or less.
T: And that makes so much sense. You could trade the IP for your cash, and not have to babysit them.
S: Exactly. Yeah.
T: That makes a lot of sense.
S: Yeah. And the software tools that we built and all the contracting and all that kind of stuff, people can basically get all of that, too. So, we have figured out the business model. It’s a business in a box. We’re looking to hand off to people and let them run with it. And then if they need some support through the software and that sort of thing, then we can provide that. But they probably won’t. So that’s a nice part.
T: And the nice thing is, it’s not physically limited either.
S: Not at all.
T: Would it be limited by like, say, in the U.S. you have a different system? We use metrics and most of the world.
S: It probably will be a little bit different in terms of inventory. I haven’t been to Australia in many, many, many years. So I don’t know what base types you have for light bulbs and like what the typical pipe fittings are for showers and faucets and all that kind of stuff. The plugs will be different like so many things, but really those are just widgets. And our model is good at keeping track of widgets and our software is really good at keeping track of widgets. So, you just sub one widget out for another widget and you’re good to go.
But it’s really a software company?
T: It’s funny because you’re talking about widgets and are talking about inventory models. We just talked about that regarding your Home Essentials business, and being able to work that.
S: You see how my brain works.
T: Well, it actually turns you into more of a software company in some ways rather than the widget business. Right? Which is not obvious.
S: Right. But we had to prove the widget business first.
T: But ultimately now you’re licencing a software essentially more or less?.
S: Yeah that’s the direction we’re going – in this direction our investors want us to go and that sort of thing.
T: So let’s talk about investors really quickly, because obviously it’s one thing to have to buy physical inventory, which depending on how big your customers are – and we just talked about one that could be quite expensive for your Home Essentials – doing software development work, though, could be quite expensive.
T: And when you start talking about infrastructure and making your own product line like that starts to add money, you have investors involved? What’s the model? Did you bring them on right away or with something you decided to do later?
S: So we started off with debt financing, so finance the company through a loan first and then, within about a year got into this incubator program. We were able to get about a year’s worth of funding through this incubator program. And that incubator program was set up through the Department of the Navy here in the United States.
Navy Incubator Program
S: And that incubator program basically provides seed funding for technology solutions that can help the Navy use less oil because the Navy is very oil dependent. And for us to patrol the entire Pacific Ocean with all these vessels and aircraft and that sort of thing, the Navy needs a good supply line of oil. So it’s really silly that homes here in Hawaii are using oil, and that we’re using oil to make electricity. Ninety percent of the electricity that’s being generated right now in this room is from diesel.
S: Hawaii is very diesel dependent.
T: And yet you could do wind. You could do so many other things.
S: So many things. Yeah. So the Navy is very interested in basically getting more oil and having a better supply of oil. And of course, if there is a humanitarian disaster out here in the Hawaiian islands and generators are cut off and that sort of thing, we’re gonna need more oil to come in and more small generators and whatever else.
S: The Navy had some good foresight and decided to invest in technologies that could reduce everybody else’s use of oil in addition to probably their own. So they invested in these small start-ups that can help them use less oil, which is cool. So, our company got a small grant from this incubator, and that’s how we got started and we started working on Navy homes out here. So, the Navy has a lot of homes out here in Hawaii.
T: So, you had an automatic customer base?
S: Yeah, exactly. So that was a big part of the incubator. And so they already had the Navy as a partner and the Navy wanted these solutions. It’s not a direct kind of thing. They have a property management company, and there’s a lot of other stakeholders and whatever else. We had to navigate this whole process to get through this, but since we did, they funded a 10-home pilot for us to do Navy homes.
S: And so…
We went and did 10 Navy homes and showed that we paid it back in four months.
S: The charge that we had to put to make it worth our time versus what they made back in their energy and water bills. So much of it just translates directly into saving oil. That it paid for itself in four months.
T: That’s incredible. That payback period is not heard of anywhere.
S: It’s unheard of in any kind of business to make three times your money back in one year. It’s mind blowing, right?
T: That really made sense. But it’s interesting that the Navy be finding these types of products for their own benefit, but at the same time helping the environment.
S: Yeah. If you can check two boxes, that’s great.
T: Yeah. And so obviously you’ve moved on from there. What are your future plans?
S: Well, it’s pretty clear what we’re looking to do is this Home Efficiency model is great and we’re looking to scale it through that white label kind of offering. We want to empower people, wherever they are to be able to use our program or our software. We’re looking at developing an app in this coming year that will kind of transform a lot of what we’re doing into something that people can do on a phone and like do for themselves and do as a business and all this kind of stuff.
S: And then with the Home Essentials line, make that an add on sale. And so hopefully our app can help tie those things together really nicely and allow people to green their own home. And then the people who are really into it are people who could then subscribe to something a little bit bigger, which is our software play, which will allow them to do this for a living.
T: So basically, you’re like the one stop shop for anything green in their home.
S: Trying to be. Yeah,
Contact Info for Scott and Pono Home
T: So just a wrap up question. If people wanted to know more about you or your businesses or even some of your ideas, how can they reach out to you?
S: Well, just on our website, they can follow us on Instagram – Pono Home or at Pono Home Essentials. If they’re more interested in the zero-waste line and then our website site, ponohome.com has contact information on online so people can contact us that way.
T: And you’re (personally) on social media as well?
T: Okay. We’ll, make sure to put some links onto the show notes. So if people want to reach out onto your Instagram page or Facebook page or website, then they can do that. And I think that you have some ideas that are definitely transferable to many places. I mean, who knows? You might get your first person from Australia that’s interested in your license program from this show. They’re always looking for ideas as well.
T: Scott, thank you for so much of what you’ve done throughout your career. It’s obvious that you’ve have this massive passion for the environment and the way that we treat the environment. And you’ve just constantly come up with different solutions to make life simple for people, but at the same time, providing a value to protecting Mother Nature.
T: So thank you for all the work that you’re doing and your business is doing for that. I hope we have a chance to talk further down the line because I have a feeling that your business is going to continue to evolve, and you’ll have some more interesting things to talk about in the future as well.
S: Yeah, thanks. Thanks for having me on the show.