Episode Rundown
03:16 Decision-making in large-scale innovative product development
07:57 Heat pump water heaters save Americans money
10:47 Innovation requires boldness and overcoming roadblocks
15:16 Home electrification endures and integrates over time
17:48 MPC effectively simulates scenarios
19:51 MPC patent inspired company's water heater innovation
Meet Michael Rigney
Michael Rigney is the CEO and Co-Founder of Cala Systems which designs, builds and sells the first intelligent heat pump water heaters for the residential market. Their mission is to make water heating a zero-emission comfort. Michael’s undergraduate degree is in Mechanical Engineering with a focus in thermal systems and he has a MBA from Stanford University Graduate School of Business. He has 20+ years of experience working with start-ups and is passionate about eliminating greenhouse emissions.
Introducing the First Residential Intelligent Heat Pump Water Heater
Michael explains that heat pump water heaters use the same technology that’s found in air conditioners to draw heat out of the surrounding air and put that into the tank. Because they aren’t burning fuel, there is an enormous increase in efficiency which results in huge savings in at least half the market. Cala’s water heaters take that a step further. They have sensors, software and hardware to learn the needs of each home to optimize water heating, allowing for even less greenhouse emissions.
How Can Manufacturers Get Past “Playing It Safe?”
Zach asks Michael to talk about what decisions manufacturers need to make when they see a problem and have to decide whether to “go after it or not” with a new product. Michael tells listeners that his perspective may be different from an existing manufacturer who’s already at scale since he comes from a startup background. He talks about three fundamental characteristics that he’s gathered from both his successes and failures: really good timing, a really good idea, really good execution. Mark gives Zach an example of when he worked at a company that was a leader in the creation of the modern demand response space for commercial industrial customers. He said the reason the company grew so rapidly was that they had a great value proposition. He went on to say that at other times in his career the market didn’t show up and the company failed.
So I've been trained by experience, those experiences, my personal experiences, to go really, really deep into ‘do you really think the dogs are going to eat the dog food?’”-Michael Rigney
The Short Answer
Michael talks more about value proposition. He says the first thing Cala thought about was heat pump water heaters as a category and how they save money in most cases. They asked the question of whether they thought there was a strong economic value proposition there. He says the short answer is that there is, that it is better technology and it pays for itself.
So half of Americans stand to save a tremendous amount of money by switching to a heat pump water heater. And that has only increased since we started the company. And we think looking at economic trends, that’ll increase even more over time.”-Michael Rigney
The next question to ask is if you have something to offer in the market. Is there an opportunity to bring innovations that matter? He talks about the architecture that they have developed and how that gives them an edge both with cost efficiency and decarbonizing greenhouse gas emissions.
And this is the vision for the company. We want 125 million home water heaters in America to put heat into the tank. That's it. If we do that, we decarbonize 3% of greenhouse gas emissions in the US, and we create the biggest battery for heat thermal storage the world has ever seen.”-Michael Rigney
Innovation and Disruption
Beth says that one thing that she and Zach talk a lot about on the podcast is that in the building products industry you have to be bold with your ideas to be in the innovator and disruptor category. She reiterates Zach’s point that testing software is totally different from building the hardware and infrastructure.
If you are introducing something that is going to require such a left hand turn or a 180 degree difference, or is going to get people thinking and asking hard questions, it has to not just be better, it has to be different.”-Beth PopNikolov
Mike agrees that developing hardware is always challenging. He says it is a long process and you have to just keep going. He doesn’t think it is about boldness, however. He says it is a commitment to realizing the potential.
What Are People Missing?
Zach states that Cala has a pulse on the macro climate and asks Michael what others in the industry should be paying attention to that they are not thinking about. Michael’s answer comes in three parts. That climate change is not going away and more people will realize something has to be done and that means electrification is here to stay. He says that secondly, there is a need to integrate the loads into the electric grid and that it will be challenging, but the technology is ready and the need is present. His final point is that trades that have always been adjacent are going to switch to merging with each other.
The Question Everybody’s Asking
Earlier in the podcast Beth asked about the AI component in reference to roadblocks Cala faced. She wanted to especially know about getting people to understand what AI does and does not mean. Since they didn’t really delve into it earlier, Beth brings it up again and Michael is excited to get back to the topic. He says that they are using model predictive control (MPC) which is a type of algorithm and is not AI. He does say that they are using aritificial intelligence where it is a great fit, like forecasting how much hot water is likely to be used in an individual home.
Get in Touch with Michael Rigney
Have more questions for Michael Rigney about Cala Systems or any of the experiences he talked about today? You can go to calasystems.com or reach out to him on Linkedin
More About The Smarter Building Materials Marketing PodShow
SBMM is co-hosted by Venveo’s Founder, Zach Williams and Venveo’s CEO, Beth PopNikolov.
