Sam, I know you're going to read this one day. Just want to say thank you for making me believe that week, brother. You ripped that beta-test to pieces. Get ready for round two, my man. This time, you're going to get that Countach you've always wanted. Round II begins later this year.
In 2012, I started my second energy brokerage, focusing on a different niche. My first business brokered energy for commercial clients: Office buildings, industrial warehouses, manufacturers, etc. Basically, any building over 50,000 square feet.
My second operation still sold energy, but in a different niche... and I fell into it completely out of sheer luck.
In January 2012, I visited one of my downtown suppliers to meet with new ownership (AEP had just purchased Bluestar Energy for a nine-figure sum). The meeting went fine, no hiccups. Nothing crazy happened. Then, at the end of the meeting, as I walked out of the conference room, I saw a face from the past, someone I had met through Ian (I'll explain who Ian is at another time). A kid one year older than me named Jay.
Jay told me that some of Ian's former partners were starting an electricity supplier, and they were launching next week. Jay hurriedly scribbled his cell phone number on the back of his card, and handed it to me. With a mutinous glint in his eye, he told me to call him when it went down.
A week later, I called the office was told "Jay is no longer with us." I hit him on his cell, and we met at a bar later that evening.
Over drinks, this cat told me about Ian's former partner, Chuck Thompson. Apparently, Chuck connected with some uber-trader out of New York, some guy in his mid-thirties worth $100M+. "We're gonna take the market by storm," Jay told me. The difference between this new operation and the opposition was that they were bringing their energy trading in-house, as opposed to calling middlemen - other traders - between the retail and wholesale markets. He spilled the beans about how they they were starting in Illinois - to start, only Chicago - and that they would eventually penetrate the rest of the Midwest. He promised to hook me up with price matrices lower than I had ever seen. In other words, for a small window in time, I would be the first broker - the only broker - with the lowest pricing in my city.
I left the meeting with a funny feeling, similar to what I felt when I found the best supplier for commercial business two years prior in 2010. But this time it was different. This time it was in my city. This time, my channel partner rep lived just a mile away from me, on the North Side. We clicked. We were on the same page. And on the day we signed our Master Agreement, we lit up some Mary Jane to celebrate.
But still, I had a problem. Until this moment, I had never had a Chicago-based client. In fact, all of my clients were out of the state; none of them were in Illinois. This presented something of a challenge to me, which was quickly solved when I got a random phone call from my cousin.
She told me about her friend John Jr, who was currently selling energy for a shady energy company by the name of North American Power (another one of those MLM/Network Marketing-type companies messing up the name of the industry). She said he was looking for something better.
I met John at a McDonald's a block away from my apartment, while he excitedly told me that he knew the top sales reps at IGS Energy by name. Not only that, he had their cell phone numbers. Right there in the McDonald's, I called up each of them: Gary, Tony, Sam and Richard.
Each conversation lasted 5 - 10 minutes. At the time, these guys were going door-to-door, selling residential energy deals to homeowners and apartment dwellers. They were getting paid $20 per deal. They were doing up to 50 deals in a week, but were averaging 20 - 30. They could have been doing more, but IGS had a TPV process (third-party verification), which required each new sign-up to spend 5 - 12 minutes on the phone with a customer verification hotline sort of thing. It sucked, and the guys hated it.
To make matters worse, their boss was a prick, an Arab in his mid-thirties with tons of fancy cars, Mercedes, Bentley, etc. He didn't pay his guys on time, and was routinely playing games with their commissions. I had all of the guys come to my penthouse on the North Side. The second they walked into my crib and saw the 30-foot ceilings, the floor-to-ceiling windows, the wrap-around balcony, and the skyline view, they were sold. They saw I was ballin', too, and they knew every dime was from the energy business. As Wall Street played on my 73-inch TV, I promised them something better. And I meant it.
I went back to Jay, telling him about the four superstar salesguys I had stumbled across. I told him that I was onto something big, and to let me beta-test a residential campaign for a week, just to see how it would go. I helped Jay's company develop the game plan, mimicking the other suppliers in the business, with a few key changes. Most importantly, we put together a "sign-and-go" process. This meant that the sales rep could simply sign a rep at the door, and not deal with the TPV process. In theory, this allow a rep to be far more efficient, and drastically increase sales. Jay's company agreed to the concept, and agreed that if it worked, they would pay my brokerage $75 per deal. I decided to pay my reps a little over half that.
I put Sam on the beta-test. He was the rep who convinced me to take the residential concept to Jay's supplier. I promised me that it would work. Sam has a wife, three children and a mortgage to pay. Since he was willing to come work sell for me, his commitment and belief convinced me.
The beta-test worked. I had Sam run it for a week, and he posted sales quickly. Jay was impressed. The next week, we launched.
I remember the first day of sales like it was yesterday. I just got goosebumps, actually. I remember the feeling like it was yesterday. My soldiers were armed with sales contracts. I woke up and grabbed my one-hitter. It was 7:30am in the morning. My nerves were bothering me, and I had trouble sleeping the night before. I walked out on my balcony, gazed out at the skyline, fired up the flame and hit Jay on his cell.
Me: "Wot up, bro. Today's the day."
Jay: "Yea, man. I was gonna hit you last night. Did you know Tony already has nine sales?"
Me: "What?" (was I high already?)
Jay: "Yea, man. I checked the system today, and he went out on Sunday and got nine."
Shit. This was going to work.
That week, my guys hit a little over a hundred sales. The next week, 150. My cell phone wouldn't stop chirping. It pissed off my girlfriend. As each guy mastered the system, they began to average 80 - 130 sales per week. My biggest week was $18,000.00. And I didn't have to lift a finger. My reps did all of the selling.
These guys were hungry. All of them had a Boiler Room type feel to them. Their aggression, their hunger... it was inspirational and contagious.
We decided to turn up the volume on an already loud situation. It was time to leverage the low price matrices that Jay promised me when we first started talking. After many conversations with my reps, and smoking until we were high as a kite, we all got the brilliant idea to focus some of our energy on selling small businesses.
If you look at this part of the ICC website, you'll find switching statistic reports for both utilities in the state: Ameren and ComEd. For free, you can download the reports in Excel format. These reports categorize clients into different segments: Small, medium, large, very large, etc. The larger the customer, the more likely they have already switched away from the utility to a private supplier. In 2012, most small and medium-sized clients (convenience stores, mom-and-pop grocery stores, restaurants, etc) had not switched. There were tens of thousands of eligible customers.
For commercial accounts, energy suppliers pay you mils. A mil is a tenth of a penny. So, if you have a client that uses, say, 50,000,000 kWh (like a very, very large office building, or a manufacturing plant), and you charge that customer 2 mils, that means the supplier pays you: $0.002 X 50,000,000 kWh = $100,000.00. Back in 2010, you could charge big clients that kind of margin. Not so much anymore. Too much competition.
But in 2012, for smaller customers, the market was still untouched, and my guys were getting away with charging as much as 14 mils per deal.
To be continued...
In 2012, I started my second energy brokerage, focusing on a different niche. My first business brokered energy for commercial clients: Office buildings, industrial warehouses, manufacturers, etc. Basically, any building over 50,000 square feet.
My second operation still sold energy, but in a different niche... and I fell into it completely out of sheer luck.
In January 2012, I visited one of my downtown suppliers to meet with new ownership (AEP had just purchased Bluestar Energy for a nine-figure sum). The meeting went fine, no hiccups. Nothing crazy happened. Then, at the end of the meeting, as I walked out of the conference room, I saw a face from the past, someone I had met through Ian (I'll explain who Ian is at another time). A kid one year older than me named Jay.
Jay told me that some of Ian's former partners were starting an electricity supplier, and they were launching next week. Jay hurriedly scribbled his cell phone number on the back of his card, and handed it to me. With a mutinous glint in his eye, he told me to call him when it went down.
A week later, I called the office was told "Jay is no longer with us." I hit him on his cell, and we met at a bar later that evening.
Over drinks, this cat told me about Ian's former partner, Chuck Thompson. Apparently, Chuck connected with some uber-trader out of New York, some guy in his mid-thirties worth $100M+. "We're gonna take the market by storm," Jay told me. The difference between this new operation and the opposition was that they were bringing their energy trading in-house, as opposed to calling middlemen - other traders - between the retail and wholesale markets. He spilled the beans about how they they were starting in Illinois - to start, only Chicago - and that they would eventually penetrate the rest of the Midwest. He promised to hook me up with price matrices lower than I had ever seen. In other words, for a small window in time, I would be the first broker - the only broker - with the lowest pricing in my city.
I left the meeting with a funny feeling, similar to what I felt when I found the best supplier for commercial business two years prior in 2010. But this time it was different. This time it was in my city. This time, my channel partner rep lived just a mile away from me, on the North Side. We clicked. We were on the same page. And on the day we signed our Master Agreement, we lit up some Mary Jane to celebrate.
But still, I had a problem. Until this moment, I had never had a Chicago-based client. In fact, all of my clients were out of the state; none of them were in Illinois. This presented something of a challenge to me, which was quickly solved when I got a random phone call from my cousin.
She told me about her friend John Jr, who was currently selling energy for a shady energy company by the name of North American Power (another one of those MLM/Network Marketing-type companies messing up the name of the industry). She said he was looking for something better.
I met John at a McDonald's a block away from my apartment, while he excitedly told me that he knew the top sales reps at IGS Energy by name. Not only that, he had their cell phone numbers. Right there in the McDonald's, I called up each of them: Gary, Tony, Sam and Richard.
Each conversation lasted 5 - 10 minutes. At the time, these guys were going door-to-door, selling residential energy deals to homeowners and apartment dwellers. They were getting paid $20 per deal. They were doing up to 50 deals in a week, but were averaging 20 - 30. They could have been doing more, but IGS had a TPV process (third-party verification), which required each new sign-up to spend 5 - 12 minutes on the phone with a customer verification hotline sort of thing. It sucked, and the guys hated it.
To make matters worse, their boss was a prick, an Arab in his mid-thirties with tons of fancy cars, Mercedes, Bentley, etc. He didn't pay his guys on time, and was routinely playing games with their commissions. I had all of the guys come to my penthouse on the North Side. The second they walked into my crib and saw the 30-foot ceilings, the floor-to-ceiling windows, the wrap-around balcony, and the skyline view, they were sold. They saw I was ballin', too, and they knew every dime was from the energy business. As Wall Street played on my 73-inch TV, I promised them something better. And I meant it.
I went back to Jay, telling him about the four superstar salesguys I had stumbled across. I told him that I was onto something big, and to let me beta-test a residential campaign for a week, just to see how it would go. I helped Jay's company develop the game plan, mimicking the other suppliers in the business, with a few key changes. Most importantly, we put together a "sign-and-go" process. This meant that the sales rep could simply sign a rep at the door, and not deal with the TPV process. In theory, this allow a rep to be far more efficient, and drastically increase sales. Jay's company agreed to the concept, and agreed that if it worked, they would pay my brokerage $75 per deal. I decided to pay my reps a little over half that.
I put Sam on the beta-test. He was the rep who convinced me to take the residential concept to Jay's supplier. I promised me that it would work. Sam has a wife, three children and a mortgage to pay. Since he was willing to come work sell for me, his commitment and belief convinced me.
The beta-test worked. I had Sam run it for a week, and he posted sales quickly. Jay was impressed. The next week, we launched.
I remember the first day of sales like it was yesterday. I just got goosebumps, actually. I remember the feeling like it was yesterday. My soldiers were armed with sales contracts. I woke up and grabbed my one-hitter. It was 7:30am in the morning. My nerves were bothering me, and I had trouble sleeping the night before. I walked out on my balcony, gazed out at the skyline, fired up the flame and hit Jay on his cell.
Me: "Wot up, bro. Today's the day."
Jay: "Yea, man. I was gonna hit you last night. Did you know Tony already has nine sales?"
Me: "What?" (was I high already?)
Jay: "Yea, man. I checked the system today, and he went out on Sunday and got nine."
Shit. This was going to work.
That week, my guys hit a little over a hundred sales. The next week, 150. My cell phone wouldn't stop chirping. It pissed off my girlfriend. As each guy mastered the system, they began to average 80 - 130 sales per week. My biggest week was $18,000.00. And I didn't have to lift a finger. My reps did all of the selling.
These guys were hungry. All of them had a Boiler Room type feel to them. Their aggression, their hunger... it was inspirational and contagious.
We decided to turn up the volume on an already loud situation. It was time to leverage the low price matrices that Jay promised me when we first started talking. After many conversations with my reps, and smoking until we were high as a kite, we all got the brilliant idea to focus some of our energy on selling small businesses.
If you look at this part of the ICC website, you'll find switching statistic reports for both utilities in the state: Ameren and ComEd. For free, you can download the reports in Excel format. These reports categorize clients into different segments: Small, medium, large, very large, etc. The larger the customer, the more likely they have already switched away from the utility to a private supplier. In 2012, most small and medium-sized clients (convenience stores, mom-and-pop grocery stores, restaurants, etc) had not switched. There were tens of thousands of eligible customers.
For commercial accounts, energy suppliers pay you mils. A mil is a tenth of a penny. So, if you have a client that uses, say, 50,000,000 kWh (like a very, very large office building, or a manufacturing plant), and you charge that customer 2 mils, that means the supplier pays you: $0.002 X 50,000,000 kWh = $100,000.00. Back in 2010, you could charge big clients that kind of margin. Not so much anymore. Too much competition.
But in 2012, for smaller customers, the market was still untouched, and my guys were getting away with charging as much as 14 mils per deal.
To be continued...
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