Zach Dell and Justin Lopas: Running Homes on 4 a.m. Power

You're building a very complex business with many moving parts across software, finance, and obviously hardware and manufacturing. Before we dive into Base itself, I want to start with your motivations. You must have a really strong sense of mission to build a business as complex and challenging as this. Zach, I've heard you use the line "there are no rich, energy-poor countries" a few times. What does that mean?

Well, if you look at energy costs and GDP per capita, they're inversely correlated. So, very simply, if you can lower the cost and increase the availability of power, you make people's lives better. You won't find a country that is energy-poor and wealthy on a GDP per capita basis. So our mission at the company is to promote human prosperity through energy abundance. What that actually means is making power more affordable and more reliable for homeowners.

Why focus on the Texas grid specifically?

Texas is where we're focused initially because it's the place where we believe the problem is most severe. But we think Texas is a canary in the coal mine for the rest of the country.

Texas is interesting for a number of reasons. First, it's in the middle of the Sun Belt and the middle of the wind corridor, so it's got a lot of wind and a lot of solar. It also happens to be an island grid, so it's on its own, so to speak, in terms of supply and demand. It has a lot of peaky residential HVAC load due to the really hot summers and the sometimes unexpectedly cold winters, so it's a particularly interesting place to deploy battery storage. It's also got a lot of growth. It's one of the fastest-growing parts of the country. There's lots of electrification happening in transportation, at the home level through electric heat pumps, and at the industrial level with new AI data center loads coming online. So it's really a place where battery storage is heavily incentivized to be deployed quickly, and that's the reason we decided to start the business here.

You've talked and written extensively about how transmission, not generation, is now the biggest barrier to decarbonization and one of the weakest elements of our energy system overall. What are the biggest vulnerabilities and drawbacks of the grid today, in your eyes?

The grid is a really impressive and performant system, but it's very old and it's not sized for modern power demand. It's really also not sized for where power demand is going. There are really two ways we can deal with that. One is to upgrade existing infrastructure, which has its own challenges, whether you consider the lead time for equipment like transformers, which are well publicized to be in a broad shortage, or just the manual issues required with installing poles and wires and getting trucks and crews out to do these upgrades. The alternative is to outfit existing infrastructure with additional capacity in the form of distributed storage and generation, and then use software to optimize those assets to scale the grid's capacity. The latter is really what we're focused on at Base, and we think it's the best way to prepare the grid for all the growth that's coming.

Let's rewind a little bit to the founding story. Zach, you and I first met at a mutual friend's house when you were still a VC at Thrive. And Justin, you were head of manufacturing at Anduril, another company we know well. How did you two meet, and how did you settle on this, of all things, to go build?

We made the Anduril investment at Thrive, and I went down to do a factory tour, and Justin was my tour guide. We became friends, hit it off and started talking about big ideas and different technologies that we both found interesting. I think we both recognized that we had complementary skill sets and a shared drive and interest in solving really big, hard problems. Toward the end of 2022 and early 2023, we both started getting excited about opportunities in energy with respect to the power grid and battery storage. Over time we started picking up steam around the idea to deploy distributed storage on the grid here in Texas, and then, of course, more broadly across the country over time. We decided this was the pitch we both wanted to swing at, and in the summer of 2023 we left our jobs and decided to go for it.

The really exciting and interesting part of the problem for me, and I think for Zach as well, is that it's a technological problem. I have an engineering background, and that's partially what gets me excited. It's an economic problem, because energy and economics are very intertwined, as Zach was mentioning earlier. And it's just a really difficult operational problem. The grid is, by definition, basically everywhere that people are, so you have a lot of physical, real-world infrastructure that is just super exciting to work on. In certain other businesses you might just be solving a technical problem, or just an economic problem, starting an investment firm or whatever, or just an operational problem, a small business doing home installs or something like that. This is all of those, and it works all areas of the brain, which is a lot of fun.

I think both of us and the team here are all people who are attracted to these multidisciplinary problems. We categorize the business as one that is solving a complex coordination problem. You see that when you're here. You'll meet hardware engineers and software engineers and manufacturing engineers working on operations, and folks working on policy and financing and all of the things in between, building a consumer brand, acquiring customers. The team here is made up of people who are excited to solve problems across disciplines. When Justin and I came together, that was really the opportunity we saw: to take our very different skill sets and bring them together to solve this multidisciplinary problem.

We've talked about the why of the business and a little bit of the origin story. Maybe now's a good time to explain in detail what Base Power is. What are the different pieces, from the retail energy provider element to the actual battery hardware to the software that powers it all? Walk us through how the platform fits together.

At its core, Base is a distributed energy business that is developing technology to scale existing grid infrastructure. What that actually means for customers is that if you live in Texas, you can sign up for Base and we'll install a battery on your home that will protect your home from power outages. We also become your electricity provider, and we're able to save folks on the order of 10% to 20% on their power. When the grid is up and running, the battery we install in the house is used for grid services. We use that battery to support the grid in times of need. And when the grid goes down, that battery backs up your home. So the customer gets all the benefits of home backup without the high upfront cost, and we get to build out our network of storage assets in a really advantaged way.

Another helpful point of context for folks not familiar with Texas or the Texas grid: in Texas and certain other places in the US, a lot of them in the Northeast, if you're a homeowner buying power, you can choose who you buy your power from. That's the retail electric provider model. If you live in California or Michigan or Wyoming, you can't. The vertically integrated utility is the only option for you to buy your power. In Texas, you have an option. So if you live just north of Austin, as an example, where we started our first deployments, you can choose from a bunch of different options for who you buy your power from. We are one of those options, and we obviously do the whole battery install and everything Zach just mentioned. We wanted to make clear to folks listening that the way we're going to market today is through a retail electric provider model.

How do those dots connect to combine that model with batteries, installation, manufacturing and so on?

REP stands for retail electric provider. The way we think about the REP part of our business is that it's the way we go to market. If we were to start in Wyoming or any of the regulated states I was referring to, we would have had to interface directly with the utility from a financial perspective. If I put a battery on your home in California or Wyoming, we wouldn't be in the economic transaction that the battery provides to the grid. The utility would have to work out some sort of deal with us, for lack of a better term. So the REP is the way we're going to market to begin with, and that is how we're monetizing the value of the battery.

We said, "Okay, we want to put distributed energy storage assets on the grid. How do we go to market?" We use the retail electric provider model. We go direct to consumers, so that's the growth part of the business. Then it was, "Okay, let's talk about the hardware and the software." We could maybe go buy some hardware and use somebody else's software, but there's not really anything on the market that is set up for the business model I just outlined. There's no hardware with a large enough discharge capacity. It's not easy enough to install. It's not meant for this business model. So we said, "We want to develop the hardware and the supporting software to support that go-to-market motion."

At its core, Base is a distributed energy technology company. The core asset of the business today is battery storage. Eventually that might look like battery storage and solar generation and other assets, but the value in the business is really in building out our fleet of storage. We believe we can deploy the largest and the most capital-efficient portfolio of battery storage in the country, and that is enabled by the technology we're developing. The technology is battery hardware designed for the use case, as Justin was mentioning. It's software to enable that battery hardware to perform that use case. And then it's the deployment operations, what we call the deployment factory, to get that asset in the ground very efficiently at scale.

The retail electric provider is, to Justin's point, how we bring that technology to market and how we build out that asset base over time. In the regulated markets, we may use a different business model, not a retail electric provider, but working directly with investor-owned utilities, municipal utilities and co-ops to deploy the same asset, battery storage, behind a different business model. That's more a function of the market structure and less about the core thing we're doing here, which is developing distributed energy technology.

There are a lot of trends underlying why now is the time to build Base. In no particular order, there are changes in demand for energy, changes in cost for solar and other renewables, and obviously the change in battery cost, which has been a huge trend that underpinned companies like Tesla and their ability to succeed. How do you think about the timing of Base overall, and what cost curves went into the business being possible in the first place?

You nailed it. There are two main ones I think we could highlight here. The first is demand for electricity specifically. If you look over the last few decades, electricity demand growth honestly hasn't been super high. It's been a few percent per year, compound annual. Now a lot of the end use of energy is moving from fossil fuels, like gas in your car or natural gas for your stove, to electricity, like EVs and induction stoves. Just the shift away from fossil fuels to electricity as the end form of energy means a large increase in electricity demand. Additionally, all the new loads Zach mentioned, electrification of heavy industry, AI and data centers, are increasing the demand for energy, and all of that energy is being consumed in the form of electricity. So demand growth is certainly one of those trends.

The other is declining cost curves and the increased maturity of technology around the fundamental chemistry of batteries and battery storage. This is a well-publicized statistic, but battery costs have been on a declining cost curve for the last decade, primarily from advancements in battery chemistry but also from scale volumes. Electric vehicles are using an enormous amount of cells, and we're able to take the best-in-class technology developed over the last decade with lithium iron phosphate batteries, battery storage and battery management systems, a lot of which was done for the EV market, and apply it to home storage. Anything I missed there?

No. It's becoming obvious to people, particularly in the investment community, that we're in the midst of a generational increase in electricity demand. A lot of that is driven by AI data centers, for sure, and that's the topic du jour today. A lot of it is driven by the electrification of transportation. I think people still underestimate the extent to which EVs are penetrated in the US. If you ask people what they think new car EV penetration in the US is, they'll tell you 20% or 30%. The real answer is closer to 5%. Of course, in Europe it's closer to 20%, and China's closer to 25%. Those are leading indicators, obviously. So we think electricity demand is poised to grow significantly in the US, and a lot of that demand is going to be met with intermittent solar.

The reality is that the cost of deploying solar and wind, but particularly solar, has come down really rapidly over the last decade, and that's going to create incredible demand for battery storage. We think existing instantiations of battery storage fall short, frankly, in terms of how quickly you can deploy those assets to the grid, where you can do it and how you can pick your spots in terms of where to put those batteries. Those things all informed the decision to start the company.

That's a wonderful segue to my questions about product. You've spoken before about the "deployment factory" and the need to build modular, repeatable processes to create, install and manage a lot of hardware for homes all over the state. Can you share more about how that all works?

Certainly. Maybe it's helpful to start very briefly with why this is hard. If you're going to put batteries on the grid today without our model, basically all of the time you do it with shipping container-sized batteries. You go buy farmland and clear it, or you buy land that's already cleared, and you pour a bunch of concrete. It's basically a huge construction project, and you do that all at once. You get a lot of batteries, but it takes a year to do the construction and many years to wait in the interconnection queue to plug it into the grid, for lack of a better way to phrase it. You're doing that once or twice a year. A big company doing this is developing a handful, a single-digit number, of battery projects. So you don't really need a manufacturing-esque, high-volume, repeatable process timed down to the minute and down to the second, like you do in our model, which is doing this at scale in the many thousands, and many tens of thousands over time.

The deployment factory is a concept we've developed that essentially takes best-in-class manufacturing practices, division of labor, good automation, software surrounding it, QA processes, training, all of the things that make a good, efficient factory building widgets or cars run, and does that in a distributed way on homes across Texas today. What that looks like is we acquire a customer, and we do all of the upfront permitting, the interconnection agreement and the site survey, basically understanding whether their home can accept the battery, all digitally and primarily automated with software we've developed. We have a very efficient process for assigning an electrician, scheduling, and then the physical install day. All of the individual processes, from what tools are brought to the site, to what pictures are taken at the end, to physically how it's hooked up, to the documentation and training we provide our installers, are thought out in this manufacturing-esque way. That enables us to install batteries in a matter of hours of physical site time and a matter of days from when the customer signs up. With competitors, you'll typically see it take many months to get a battery on the grid, because it's all very manual and bespoke and thought of as a project. In our case, we can do it in a matter of days, depending on the city. Our average is on the order of two or three weeks.

As you scale and serve more customers, what are the bottlenecks in your supply chain, or the challenges you'll have actually scaling that?

Scale is really interesting. A bunch of different things all have to come together on the day of install. There's the hardware supply chain, the electricians or installers, and then the homeowner needs to at least allow us there and be interested in the product. On the supply chain side, there is a ton of production buildout for lithium iron phosphate cell supply, which is the technology we're using today. So we think we're pretty well poised to take some of the excess capacity we think is coming online over the next few years.

Similarly, on the installer side, one of the things we're doing is breaking out a lot of our install tasks, trying to make them require as little skill as possible, and training up our labor force. We will certainly run out of very highly skilled electricians. So we're trying both to de-skill the operation and to build a training program that upskills the labor force and makes this work far more accessible to many folks. I think this is an under-discussed and under-appreciated challenge with a business like ours that requires a physical presence and physical labor. This is the case for many manufacturing businesses: both de-skilling the requirement via automation and upskilling the existing labor pool to meet that requirement.

The big groups of operations challenges are hardware sourcing and supply chain management, installer scheduling, and last-mile logistics. Doing all of that in parallel, as Justin mentioned, to get it to happen in a matter of weeks instead of months requires building a bunch of custom tools, because of the way the industry works today. Justin did a good job of comparing it to utility scale, but for home battery installs, if you buy a home battery from one of the existing upfront sale-focused home battery companies, they'll typically sell you the product, usually with some kind of financing, and then connect you with a third-party electrician. Or you'll buy the product directly from the third-party electrician. This is an owner-operator, local electrician. It could be a national chain, but you'll work with those folks to do the permitting, do the interconnect agreement and schedule the install. It's not exactly an elegant handoff from party to party.

By managing the whole system ourselves, we can build software, as Justin alluded to, to make the process a whole lot more efficient, and most importantly a better experience for the customer, and really less expensive for the customer. All of these optimizations help us drive down the cost for our customers, and at the end of the day, that's why we're here. Back to the mission: it's about delivering affordable, reliable power for our customers, which means the most affordable home backup on the planet, and that's enabled by all these optimizations.

I would say "not quite elegant" is an understatement. That takes me to my next question, which is about the customer journey. What are the key steps, from customers hearing about you, to making a purchase decision, to going through the entire flow, with respect to the economics, which you alluded to already, and also the job to be done and the brand message you're putting forward?

Our goal is to make it as seamless as possible to get home backup and access to our affordable electricity rate plans. Today, if you want home backup, your options are really twofold. One is you can buy a battery from one of the existing sales-focused home battery companies. The other is you can buy a generator. There are small portable generators, and there are large, in-the-ground, natural gas line-connected generators. Both of those options will typically run you anywhere from $10,000 to $20,000, depending on the size. Of course, the small portable generators could be $1,000, but that's not going to back up very much of your home. The power output is going to be pretty low on those. So a generator comparable to the scale of battery we're installing is going to be orders of magnitude more expensive than our offering.

With Base, you sign up, you pay a small fraction of what you'd pay with one of the alternative providers, and we schedule the installation directly with you in a matter of weeks, with a few back-and-forth text messages or phone calls, whatever the customer prefers. It doesn't take a bunch of back-and-forth. It's pretty straightforward. I encourage folks to go online to basepowercompany.com. If you live in Texas, you should sign up. If you don't live in Texas, you can use a Texas address to see the sign-up flow and stop when you get to the payment point. We've made things pretty seamless and tried to put a bunch of content on the website so people can answer their own questions and get all the way to scheduling their installation without having to jump through a bunch of hoops.

It's worth noting that because we're vertically integrated in this way, we handle all of the items the customer would normally have to handle around permits and that sort of thing, and working with the electricians. We own all of that, so it's abstracted away from the customer. Basically we say, "Hey, we're going to be ready in a week to install your battery. Does this day work?" And that's it.

What is the driving impetus from the customer's point of view? Is it wanting home backup in case of an outage, or is it the cost element of drawing from the grid at lower rates?

The product has only been available since May, and we're constantly learning, iterating and trying to get feedback from customers. But the early data suggests that most customers sign up with Base because it's the most affordable home backup on the planet. They want protection from power outages, but they're not willing to pay $10,000, $15,000 or $20,000. So Base is a no-brainer for them, because it lets them get that peace of mind, that backup protection, at an affordable price. We also bring the added benefit of an extremely competitive retail electricity price, which is great, and people love saving money on their monthly bills. But it seems the really strong driver is affordable home backup.

Why start with a residential, consumer focus rather than a commercial enterprise flow, given that backup is probably very important to some businesses as well?

There are a bunch of reasons. You can point to the size of the market. It's just a massive, massive market, and the commercial opportunity in terms of market size is extremely attractive. But I think it's more that it aligns with our mission, which is promoting human prosperity through energy abundance by lowering prices and increasing the availability of power. If you don't protect people from outages and provide them with affordable power at home, where they spend most of their time and consume most of their power, you're not really solving the problem. We do think the commercial market is important, interesting and attractive, and we plan to make our way there over time, but the residential market is really where the problem is. If you look back at Winter Storm Uri, if you look back at Beryl over the summer, or what's happening in Florida right now, although obviously we don't serve that market yet, you have people in their homes who, in the case of Uri, were freezing to death, and in the case of Beryl, went without power in the Texas heat in the dead of summer for days or weeks. I think we all here feel very strongly about solving that problem for consumers.

There are two other points I would add. One is that with the residential, direct-to-consumer model, you can build a brand, and the brand is really important from a go-to-market perspective, obviously. One thing I've learned over time is that even though a brand might in theory not be as important for a commercial sale as for a residential, direct-to-consumer sale, people are buying it in either case. It's a person who owns a home, or a person who owns or operates a business. So building that brand with the residential part of the market is super important.

The other thing, and this is maybe not exactly what you asked, but I think it's an interesting point, is where on the grid you put the battery. Do you put it at the very edge, or a little closer to the center, toward the power plants? Our view is that the more distributed, the more downstream, the more load-side connected the battery can be, the more effective it is, obviously for backing up during outages, but from the grid's perspective as well. You're able to shave load and affect demand, not just affect supply, like you would if the battery were further upstream in the grid.

You launched in Austin in May and went to Dallas-Fort Worth in August. Can you share any metrics or details on traction so far?

We've got a couple hundred batteries in the ground, we're tracking to a couple thousand batteries in the ground next year, and on the order of tens of thousands of people have expressed interest online. We're scaling up as fast as we can, as we talked about earlier. The constraint is building the machine. There was a point where installing one battery a day was a really exciting milestone for us. I think yesterday we installed nine batteries. So getting that daily rate up to nine, 10, 11, 12, 15, 20, 30 a day is really the core focus of the team, certainly the deployment operations team. We're early in our growth ramp, but off to a good start.

Your main revenue stream, for now, is the arbitrage of power costs and grid services, although to get there I think you'll need to build a big portfolio of batteries distributed across a lot of customers at the edge, as you mentioned. Can you describe how that business model works, and how you can use the battery network to make money while saving customers money?

There are really three ways we make money. One is that we charge an upfront fee for the product. It's a fraction of what you might pay for the equivalent-size battery or generator, but that is one way we make money. The second is that we become your power company. Every month you buy your electricity from Base, and we sell that power to you. The third way we make money is what you're alluding to, which is what we call grid services. The way that works is that when the grid is stressed, at times of peak demand, we discharge power from the batteries, and when the grid is at times of low demand, we charge the batteries up. To oversimplify, we're typically charging the batteries from 10 p.m. to 4 in the morning, somewhere in that window, and discharging them between 7 and 9 p.m., when the sun is going down, everyone's at home with their TV on and their dishwasher running and friends over using a lot of power, and power prices are spiking. What we say flippantly is that we want to make your home run on 4 a.m. power, not 6 p.m. power. That's really what we're doing on the grid services side of the business.

Moving on to markets outside of Texas. You mentioned earlier that outages and grid problems are not limited to Texas. They're all over the place, due to natural disasters like the ones in Florida we're seeing this week, and there are numerous political challenges in California. You've mentioned that deregulated energy markets are a big opportunity to use modern technology to make the grid more stable and cost-efficient, and there are about 15 other states with somewhat deregulated markets. How do you think about scaling outside of Texas in the long run?

The other deregulated states are certainly an attractive opportunity, but the rest of the country, the two-thirds of the country that is regulated, is, you could argue, equally or more attractive, depending on how you look at it. The reality is that we are a distributed energy technology company. Every person at the company is working on developing technology, hardware, software and deployment operations, to scale the power grid and solve problems on the distribution grid. We've opted to package that technology behind a business model that leverages competitive markets in the deregulated parts of the country, specifically Texas. We're certainly looking at packaging that technology and bringing it to the regulated parts of the country behind a different business model that partners directly with the utilities, as we mentioned earlier.

If you spend time in this office, what you'll see is a bunch of people working on technology to make the grid better, and we think that technology is needed in both the deregulated and the regulated states. But as a place to start, we think the deregulated states make the most sense. So we're starting here in Texas, we'll eventually go to the other deregulated states, and we may in parallel take the same technology to the regulated states.

Worth noting, and maybe obvious, but Texas is a huge place. It's the eighth-largest economy in the world. It's larger than most countries from an economic perspective, so there's a lot of room to run just in the state of Texas, just in ERCOT. It's also a particularly good place to build a business. So for all you entrepreneurs out there figuring out where to build a company, we highly recommend doing it here in the great state of Texas.

How heavily affected are you by the regulatory environment today, both from a doing-business perspective and from an energy perspective?

It's funny. "Deregulation" is a little bit of a misnomer. We joke about it. It's not as if there are no regulations. What deregulation really means, very simply, is that the company that owns the poles and wires and transformers and substations cannot sell you electricity, and also can't own generation or storage assets. That's really all deregulation means, in the context of this discussion at least. Energy, even energy in Texas, is a heavily regulated industry. There are a ton of rules on the consumer side as they relate to our retail electric provider model. There are obviously a ton of items related to code compliance and installations on homes, from a safety and certification perspective. And there are a ton of regulations on how we interface with the utilities. Even though we're in a deregulated market and sell power to customers through our REP, we still interface with the utilities, because we're putting power back on their system. They have a bunch of rules, regulations, codes, requirements and safety items that we work through. So regulatory affairs and policy work is actually a big part of our business, something we're spending quite a bit of time on.

From an outsider's perspective, it might seem that Texas and renewable energy, just from a political standpoint, would be a little bit at odds. It turns out they're really not. Batteries, especially batteries on the distribution grid in a distributed fashion, are a really techno-economic optimum product to add robustness to the grid and increase reliability. So we've actually seen a lot of really positive support from folks in all aspects of the regulatory environment.

We've been really encouraged by the collaboration between regulators, policymakers and technology companies like Base in Texas specifically around upgrading the power grid with new technology. To Justin's point, it's a highly regulated industry. Deregulation in this context really just means retail competition, and that's part of why we decided to start in Texas: we could go to market immediately. We didn't have to wait to strike a deal with a big investor-owned utility. But even in a deregulated market, we still work very closely with policymakers and regulators to make the conditions under which technology companies operate more conducive to the opportunities out there to make the grid more reliable and scale capacity.

What other policy issues or initiatives are you focused on in the coming years to make Base most effective here in Texas, and also most effective expanding to other states?

We could bore you for hours with details on permitting reform.

Without the boring.

There are a lot of specific details around things like permitting reform and electrical codes. The zoomed-out way to think about it is that the existing system is outdated by definition. As the technology changes and gets better, we need new rules and requirements to adapt to that new technology. You've seen this in basically every industry ever, especially ones working on safety-critical systems. Dealing with the power grid, dealing with people's power at their home, you're going to have regulation. Like I said, we've been extremely encouraged by the willingness of regulators and policymakers to collaborate with us as leaders on the technology side, to figure out what is coming and how to adapt the rules and regulations around that technology.

My sense is that this is pretty unique to Texas. Texas does its own thing in certain ways, and that's certainly the case with the grid. It's its own islanded grid. A lot of energy innovation in general happens here in Texas, we've noticed, and that's because of the regulatory environment and the forward-thinking nature of the Texas legislature, the Public Utility Commission and the folks surrounding both of those.

Texas should be the energy capital of the world. As we mentioned earlier, it's in the middle of the Sun Belt and the middle of the wind corridor. We've got a ton of land. We've got ports. We have competitive free markets. We have great engineers, operators and technologists, lots of capital, and local and state governments willing to work with technologists to usher in the future. So we're extremely bullish on Texas as a place to build a company, and specifically as a place to build an energy business.

You mentioned the decentralized nature of your general approach. What are the advantages of that compared with a more centralized battery operation?

This is a really interesting and maybe nuanced, technology-driven point, but I think it's really important for folks to understand, especially those interested in the grid, how the grid works and the engineering behind it. Think about the grid as a network. You can have storage on the network all concentrated in big areas, or you can have storage distributed at the edge of the network, at the branches of the tree as opposed to the trunk. Our view, and there's a lot of third-party research to back this up, is that having storage at the edge of the grid is really effective at making the grid itself more efficient.

If you look at any given line on the grid, there's a metric called load factor. This is maybe a little bit nuanced, but basically it's how much of the time that line is used to its maximum capacity. What you might be surprised to find is that the load factor is typically very low. Most of the time, that line is very underutilized. The problem is that it's overutilized certain days of the year and certain hours of those days, and that tends to drive a lot of outages and a lot of the requirement for upgrading infrastructure. But if you're able to put storage co-located with the load during times of high demand, you're effectively able to take that home or that business off the grid. Now the battery is supporting that load instead of the grid, but you can only do that with the battery connected to that load. So distributed batteries are a really effective and interesting technological way to improve the efficiency and reliability of the grid.

The other thing that's really nice is that because you have batteries distributed in a bunch of different places, you can pinpoint certain areas of the grid that need support, and either deploy more batteries or just discharge the batteries you have in that area, down to the individual home level or the individual substation level. That's not something a centralized, typical grid-scale battery can do. It's enabled by the distributed energy technology we're developing and the software that connects all the batteries and says, "That one needs help right there for the next 15 minutes, so we'll discharge right there." That's something totally unique to the technology we're building.

You also benefit from the data you're able to collect by having grid assets spread out on different nodes and different load zones. When you put a single battery next to a substation on the grid, you collect a certain amount of data on what's happening at that load zone, at that node. But by having batteries all over the grid, specifically on residential homes, you're able to build a really valuable data set on what's happening on the grid in specific areas at different times. If you look at power prices in ERCOT in Texas, demand is generally driven by residential HVAC. You have really hot summers and sometimes uncharacteristically cold winters, so when people are cranking their AC in either direction, that drives a lot of the demand squeezes and price changes. Of course, there are other reasons prices move on the grid, and we're certainly building expertise in that, but we're not experts in energy trading today. We have some folks on the team who are, but we're not a commodity trading firm. As a technology company that deploys these assets at the edge, we're able to build up a really unique data set that no one else has, by putting computers, effectively, on the circuits at individual homes.

The last thing I want to touch on is the Base team. You and I have talked a little bit off camera about this, and some people in the Contrary network have joined Base. What kind of team do you want to build, how's it been going, and who do you want?

First, I'll just say that the team is the company's most valuable asset. We talked earlier about distributed batteries and generation being the core asset, but at the end of the day, the team is the company's most valuable asset. A company is just a bunch of people in a room clicking on keys, and if you don't have the best people in the world clicking on those keys, you're in for a tough go, particularly in a competitive industry like energy. So we've been laser-focused on recruiting the best people in the world to join the company.

When you take on a really ambitious vision, mission and strategy like we are at Base, where we think we have the opportunity to build a really massive company and actually promote human prosperity through energy abundance and affect people's lives and put it in the universe, it makes it a heck of a lot easier to attract top talent. The best people in the world want to work on hard problems. They want to be in an intense environment. They want to be pushed to do the best work of their career. They want to work with hardworking, smart people who take their work really seriously. If you spend time with the Base team, you'll find that people are intense, they're direct, they're smart, they work hard, they're very mission-oriented and they're very focused. That is the kind of people our culture attracts, and we've been very lucky to be able to build a team of really talented folks. A lot of credit goes to Justin and our early team. Justin started his career at SpaceX and spent time at Anduril, and we have a bunch of folks who have come from SpaceX and Anduril and other companies like Tesla and Apple, folks I met through my time as an investor, and folks like you at Contrary who have helped bring exceptional talent into our orbit. We'll never lose sight of that, and recruiting the best talent in the world will be a core focus for us and for the company as long as we're around. So to any great engineers or operators out there who want to be part of something special, put it in the universe and do the best work of their career, please reach out.

Last quick question. We sometimes ask this when investing, to frame the challenges and opportunities ahead at a high level. If the company, in theory, were to fail in a few years, why would that be? And conversely, if it were to work, what would be the one thing you really nailed that made it take off?

The risk, or the failure mode, is execution risk. There are a lot of really hard things happening in this building. There's hardware engineering, software engineering, deployment operations, supply chain, capital and financing, regulatory work. As we've talked about at length, we have to make all those things happen well and at once, and that's very difficult. So I think the failure mode probably looks like some level of execution misstep. And you could say the same thing about the success case. It looks like nailing execution across a bunch of different vectors: solving really hard engineering problems across multiple domains at the same time, then having really world-class execution to bring those engineering solutions into the world, financing those things effectively and doing effective policy work. So it's really building this complex coordination machine effectively.

Candidly, that could be the downfall of the business, although we certainly don't plan for that to happen. And that will also be the reason we succeed.