I was on a panel discussion the other day and was asked which business and which entrepreneur I’d backed personally would have the biggest impact on society over the next ten years.
While I’m clearly more than a little biased, my answer was Octopus Energy (and its founder and CEO Greg Jackson). I’ve said for the last few years that I think this business has the potential to transform one of the last multi trillion-dollar markets globally. And while I’m sure there will be bumps along the way, I’m more confident than ever that they will.
Society is demanding change
The tailwind for change is there. Ask anyone to name the #1 societal issue and they will almost certainly answer ‘climate’. The conversations – at national, business and household level – are happening. Mindsets have shifted and governments, companies and consumers all want to do the right thing.
The green transition is accelerating – whether it’s the number of electric vehicles (now 6% of new vehicle sales), the scale of renewable energy generation (44% market share of UK electricity generation in Q2 2020) or digital customer interfaces that remove friction and significantly reduce costs. In fact, I think we’re reaching a tipping point where change will happen more quickly and on a bigger scale than most people can imagine.
The power of Kraken
Octopus Energy sits at the epicentre of this green revolution. As a technology business, it’s in the perfect position to change the way tens of millions of households and businesses think about, generate, use and pay for their energy.
Technology is in the DNA of everyone who works in the business (it was the first energy company to be voted Technology Company of the Year at the 2020 National Technology Awards). At the heart of their success is a proprietary technology platform called Kraken. Kraken allows them to deliver the best service in the energy sector and puts them at the vanguard of making energy both cheaper and greener.
I’m fortunate to have seen Kraken up close. I’ve seen the team migrate hundreds of thousands of accounts from other suppliers in a matter of weeks. And I’ve seen them innovate at a frightening pace – from setting up the UK’s first electric vehicle roaming network to launching the world’s first Agile tariff which tracks the price of wholesale energy every 30 minutes, encouraging domestic customers to consume energy when it’s at its cheapest.
The power of Kraken hasn’t been lost on the rest of the industry. Huge energy businesses around the world have now contracted to re-build their energy businesses on our platform. In fact, Kraken is now contracted to serve 17 million energy accounts worldwide through Octopus’s own retail energy businesses as well as third-party licensing agreements.
The success of these third-party agreements are there for everyone to see. Millions of accounts migrated across in months, with customer satisfaction levels increasing almost overnight. Of the top six rated energy businesses on Trust Pilot, Kraken currently powers four of them.
Earlier this year I wrote a blog about Octopus Energy becoming a unicorn (a company valued at more than $1 billion) when they received an investment of $300m from Origin Energy, Australia’s leading energy company. It was a milestone they achieved in less than four years and a testament to both the quality of the team and the size of the opportunity.
I’m not surprised that seven months later they’ve done it again.
Earlier this morning, Octopus Energy announced that it had agreed a major strategic partnership with Tokyo Gas, one of Japan’s leading utilities, in a deal that valued the business at more than two American unicorns ($2 billion).
Tokyo Gas will be investing $200 million in return for a 9.7% stake and Origin Energy will be topping up its original investment by another $47 million. The funds will be used to drive Octopus Energy’s green energy revolution around the world.
Just getting started
Lastly, much as the double-unicorn status is a great accolade for the business, it’s not what gets the team out of bed in the morning. We build businesses to make a difference in the world rather than to make a financial return. In our experience, when we get this right, the value follows.
Secondly, this is simply another marker in the journey. The scale of the energy opportunity globally is colossal. We believe that we have the technology, the team and, with Origin Energy and Tokyo Gas now on board, the partners to build something extraordinary over the next decade.