FOSTER CITY, Calif. — Lyndon Rive, a former member of the U.S. National Underwater Hockey team, didn’t have a mother who doted on him.
She worked until 11 p.m. most nights and didn’t go to his boyhood sporting events.
Yet, Rive considers her the “best mother in the world” and not because she retired at age 45 as a millionaire. “She always supported me in whatever I wanted to do,” Rive says.
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That turns out to have been a good choice.
Rive, 32, is now CEO and co-founder of SolarCity, which in three years has grown to become a leading residential solar installer in California, the nation’s largest solar market.
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Perhaps more important, California-based SolarCity has emerged as one of the top consumer brands in solar at a time when green is hot and President Obama makes solar and other renewable energy sources front-page news.
Last year, SolarCity helped pioneer a way to bring solar to the masses and remove one of the biggest hurdles to its widespread adoption: costs of $15,000 or more for homeowners to go solar. With a SolarCity residential lease, customers can lease a system at no money down, and in many areas, save 10% to 15% a month on their combined electric and lease-payment bill, SolarCity says.
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While other companies offer similar financing options, SolarCity has “created the first brand in solar for consumers,” says Joel Makower, executive editor of GreenBiz.com, an online trade publication. “They were very smart and creative in an industry that had been plodding along.”
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On any day in San Francisco, chances are good that you’ll spot a green SolarCity van en route to an installation. The company claims 4,500 residential and commercial customers in California, Arizona and Oregon, including eBay and Intel.
Rive says SolarCity’s revenue will grow 40% this year – despite the recession – and 250% next year, given orders on the books. SolarCity employs 450 and plans to add 180 workers in the next quarter, he says. It also aims to expand to at least five states in the next year. Rive, while not releasing revenue for the privately held SolarCity, says it turned its first profit in the recently finished third quarter.
“Our trajectory is on fire,” Rive says.
That’s not a new phenomenon for him.
At age 17, Rive raked in thousands of dollars a month in his native South Africa as a distributor of natural cosmetics. The business ate up so much time, Rive never went to high school, and faced expulsion. His mother told him to “solve this problem,” Rive says.
Armed with his financial statements, Rive met with the principal, who then agreed to let Rive skip school but take the exams. Rive graduated and never set foot in college.
Still, he was a millionaire at age 30, he says, thanks to the sale of his second company, PC-monitoring firm Everdream, to PC giant Dell in 2007. At age 18, he was able to buy himself a two-seater plane and a ski boat. He now drives an electric Tesla Roadster; retail price: $100,000.
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While Rive enjoys the perks of his success, business comes first. Lunch on a recent afternoon amounted to a bagel eaten while the 6-foot-2-inch Rive loped two steps at a time up an escalator to get to a meeting.
“Lyndon is a classic Silicon Valley entrepreneur,” says John Fisher, managing director of venture capital firm Draper Fisher Jurvetson, which invested in Everdream and SolarCity. “He’s savvy, gutsy, ambitious, fearless and driven.”
Too good to be true?
Rive will need all those attributes in the competitive solar market.
Nationwide, hundreds of solar companies and installers vie for business, especially in SolarCity’s key market, California. Competitors, such as REC Solar, Akeena Solar, GroSolar, SunPower and others, are also building successful brands.
To date, solar provides 1% of the USA’s energy. Despite the push by the Obama administration for more use of renewable energy, many states still lack strong enough incentives and laws to move broad solar adoption, says Matthew Woods, vice president of sales for REC Solar.
Financing and incentives can also be touch-and-go. Earlier this year, some SolarCity customers had to wait six months to get installations done after financing options dried up following last year’s financial market meltdown. SolarCity has since solved that problem with the creation of a $100 million fund by US Bancorp to finance its lease deals, it says. Other companies got caught in the same credit crunch, SolarCity spokesman Jonathan Bass says.
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Still, one of Solar City’s biggest challenges is overcoming homeowner skepticism that its lease deal is too good to be true.
“We hear that a lot,” Rive says. “But we do save you money, and it doesn’t cost you a cent to go solar.”
SolarCity’s leases run for 15 years. The company designs, installs and maintains the system. SolarCity owns the system and gets the accompanying federal tax credits and state incentives. Homeowners pay SolarCity for the lease and the electricity they use. That’s typically about 15% less than their traditional monthly electric bill, SolarCity says.
Lease rates go up each year by up to 3.9%, no matter how much or how little electric rates move. And people who don’t use a lot of electricity aren’t likely to see savings, SolarCity says. In California, for instance, that’s anyone with electric bills under $150 a month.
Given federal tax credits, homeowners with available cash may also do better financially to buy a system, says REC’s Woods. SolarCity, as does REC, also offers outright sales, as well as leases or leaselike options.
But for those without cash or the gumption to maintain their solar systems, leasing is a “pretty good deal,” says Paula Mints, analyst at research firm Navigant Consulting.
The too-good-to-be-true thought crossed the mind of Los Angeles architect Colin Summers, 43.
“It felt a bit like subprime loans,” Summers says. He contacted SolarCity after spotting a Prius blanketed in the SolarCity logo.
Summers signed up for a SolarCity lease for his 2,000-square-foot Santa Monica home last year. The impetus? He likes being green. He loves technology. And his electricity bills had jumped to more than $300 a month.
Summers now pays about $200 a month: $80 for electricity and $120 for the lease. If he sells his home, Summers can transfer the lease to the new homeowner or pay it off.
Given the lure of green living among Santa Monica residents and the financial savings, Summers expects solar to be “more of a selling point than a problem.”
Underwater hockey ’showed drive’
Some big names have bet on Rive and his elder brother, Peter, SolarCity co-founder.
SolarCity has raised $80 million in venture capital funding, including from Draper Fisher Jurvetson.
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Lyndon Rive was 22 when the venture capital firm first invested in him. One thing that impressed Fisher was Rive’s underwater hockey skill. The sport is played with lead pucks, pushed along the bottom of the pool by short sticks. Players wear fins and snorkels.
At age 18, Rive joined South Africa’s men’s open division team. In 2004 and 2006, he played for the U.S. team. In 1998, he first came to the U.S. as part of the South African team. Shortly thereafter, he sold his South African company and followed a brother to Silicon Valley.
“The notion of playing hockey underwater while holding your breath showed me Rive had extra passion and drive,” Fisher says.
Another SolarCity investor is Elon Musk, co-founder of online payment system PayPal, co-founder of electric carmaker Tesla Motors and CEO of rocket-maker SpaceX.
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To say that Musk and Rive go way back is an understatement. Not only are they cousins, but their mothers are twins, and their fathers share the same birthday.
It was on a road trip with Musk to the Burning Man art event in the desert of Nevada that Rive first started thinking of solar.
Musk had invested in Everdream, too, and asked Rive what they were going to do next. Musk tossed out the idea of solar.
Rive and his brother, Peter, who is so green he catches his rainwater, vetted the idea. While technologists at heart, the Everdream co-founders decided the market didn’t need a new solar panel or something else technical as much as it needed a new brand that made adoption easier.
Currently, about 65% of SolarCity’s new residential customers choose to lease vs. buy a system, SolarCity says. The key to SolarCity’s future success, Rive says, is getting every homeowner-customer to feel like a VIP – whether they lease or buy.
Tuesday, 24 November 2009 From Business Mirror
From the Business Mirror Contrary to popular misconception, environmental initiatives often don’t raise costs, they lower them—and fast. Leading companies continue to find large savings in shockingly simple actions, such as changing lighting or using outside air to cool a data center.
