YouSaid · the spoken record

Kathy Hannun

lines on the record: 35
first: 2023-06-08
most recent: 2023-06-08
sittings or episodes: 1
sources: podcast

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“Should immediately start building new homes with heat pumps and new homes is the ultimate case where you can just put in like 100 ground loops, 200 ground loops at a time. And it's very, very cost effective. We're also constantly working on policy, so making more and more states heat pump friendly. And then, of course, we're just continuing to gain efficiency and sort of build our own operational capacity so we can bring our costs down and make the pricing work out for more and more people across the country”
2023-06-08 · How I Built This with Guy Raz · Tapping the heat beneath your feet with Kathy Hannun of Dandelion Energy · IDENTIFIED FROM THE TRANSCRIPT
“And the way to do that is heat pumps, and a lot of utilities don't want their peak demand to double. So people are starting to take geothermal heat pumps much more seriously as a tool to do this, especially as we've been able to bring the cost down so that the economics makes sense in more and more places. So we're doing a few things. One is one of our investors in our most recent round, Lennar, the home builder. We're really interested in starting to get into new homes, new construction. Why are we building new homes that have furnaces and boilers when we know we're just going to have to replace them with heat pumps?”
2023-06-08 · How I Built This with Guy Raz · Tapping the heat beneath your feet with Kathy Hannun of Dandelion Energy · IDENTIFIED FROM THE TRANSCRIPT
“Absolutely. I guess first I'll say one of the things that I just want to be upfront about at this part of my journey in the company is like, I don't even feel comfortable saying I've raised $135 million. I have built a team that, you know, I ended up in 2020 hiring a CEO for dandelion. Now I'm president and run sort of a product and engineering groups. We have a very talented management team that has taken this idea and built it to where it is today. And our plan for expansion. Look, like so many more states are realizing we need to solve this heating problem if we're ever going to meet our climate goals.”
2023-06-08 · How I Built This with Guy Raz · Tapping the heat beneath your feet with Kathy Hannun of Dandelion Energy · IDENTIFIED FROM THE TRANSCRIPT
“Temperature. It's very mild. And yeah, to your point, when I was first pitching the company with our initial seed round and I would pitch to venture investors in Silicon Valley, I didn't get a lot of traction. When I would go to New York or Massachusetts-based investors, that ended up, those were the investors that ended up. Doing our seed round just because it's just you have a different relationship with heating, especially, but also cooling. It gets a lot more humid and hot in the East Coast.”
2023-06-08 · How I Built This with Guy Raz · Tapping the heat beneath your feet with Kathy Hannun of Dandelion Energy · IDENTIFIED FROM THE TRANSCRIPT
“Yeah, as you go down, you basically get to the average air temperature in that location. So exactly as you said, the temperature varies so much at the surface with the winter and the summer. But once you get 10 to 500 feet underground, it's pretty constant. And that's exactly why ground source heat pumps work so effectively.”
2023-06-08 · How I Built This with Guy Raz · Tapping the heat beneath your feet with Kathy Hannun of Dandelion Energy · IDENTIFIED FROM THE TRANSCRIPT
“Whereas with ground source, peak demand would increase by 17%. So it has that benefit too, where the ground is serving as almost a buffer. You're not using as much electricity and you're certainly not using as much on the peak days. And then the last thing I'll say is that many homeowners in the Northeast today that decide to get an air source heat pump use a fossil fueled system for backup. And that allows them to make sure they have enough heating on the coldest day. Know with our customers, none of them have a you don't need a backup, you don't have it. So that's another advantage. It's just 100% heat pump.”
2023-06-08 · How I Built This with Guy Raz · Tapping the heat beneath your feet with Kathy Hannun of Dandelion Energy · IDENTIFIED FROM THE TRANSCRIPT
“To heat pumps is that peak demand will become a problem in the winter. And with air source, this is especially challenging. So a study was done for the state of Rhode Island of just like what will happen if you convert all your heating systems to air source heat pumps and the peak demand on that grid would double. And the reason for that is on the coldest day All of the air source heat pumps will be operating at their least efficient and they'll all do that at the same time”
2023-06-08 · How I Built This with Guy Raz · Tapping the heat beneath your feet with Kathy Hannun of Dandelion Energy · IDENTIFIED FROM THE TRANSCRIPT
“Yeah, I mean, I don't want to say one is necessarily better than the other in general. I think that in some cases, air source is better and in some cases ground source is better. But let me tell you when ground source or geothermal is better. So for one thing, especially in places where it gets cold, the cost to operate a ground source heat pump is about half of the cost to operate an air source heat pump because you have access to that constant temperature ground. And that's allowing you to always run your heat pump at high efficiency. Air source heat pumps run at very high efficiency in mild weather, but when it gets really cold, they lose efficiency. And that means that if you step back and look at sort of the more societal view, one of the challenges that we'll face when we convert all of our heating systems”
2023-06-08 · How I Built This with Guy Raz · Tapping the heat beneath your feet with Kathy Hannun of Dandelion Energy · IDENTIFIED FROM THE TRANSCRIPT
“That's right. The way to think about the carbon neutrality of geothermal is similar to electric vehicles. Without heat pumps, you have just millions of point source emissions. Every furnace or every boiler is emitting its own stream of emissions. If it runs on gas or oil or propane. And at least in my opinion, the only practical way to solve the problem is to electrify the entire fleet of heating equipment. And that will be done. Almost exclusively with heat pumps. And then what you've done is, yes, they still use electricity to run, but then you can just focus on cleaning up the grid. And once the grid is cleaned up, you'll have a totally carbon-free system.”
2023-06-08 · How I Built This with Guy Raz · Tapping the heat beneath your feet with Kathy Hannun of Dandelion Energy · IDENTIFIED FROM THE TRANSCRIPT
“The actual work that takes place at the house, you need one day, two days-ish to put in the ground loops, depending on how big the house is and how many ground loops are required. And then installing the heat pump typically also takes about a day, though some homeowners get a water heater or ductwork or things like that, and it can take a little bit more time. In terms of our wait times, they've varied at our worst. We forced our customers to wait over a year in some markets because we had so much demand. But now we've managed to bring it down. It's more like four months. So we've made a lot of progress there.”
2023-06-08 · How I Built This with Guy Raz · Tapping the heat beneath your feet with Kathy Hannun of Dandelion Energy · IDENTIFIED FROM THE TRANSCRIPT
“one off project. There was no assembly line. There was no company who was trying to figure out how to standardize the process and then do every step of it as efficiently as possible. That is the role that we are playing. So to give one example, only 18 months ago we had two drilling rigs. Adapted to be optimized for geothermal in small suburban residential yards. So we went from having two to now we have 14 running full time. And this business is all about throughput. So if you have Rigs and your people, and like all of your assets constantly working to put in systems, then you're able to amortize that overhead over many, many, many more systems. And the cost is much, much lower for homeowners.”
2023-06-08 · How I Built This with Guy Raz · Tapping the heat beneath your feet with Kathy Hannun of Dandelion Energy · IDENTIFIED FROM THE TRANSCRIPT
“There are a few different things. Certainly, the policy landscape has been a great tailwind for us starting this company. Know Trump was president. Oil was relatively inexpensive. People weren't talking about heat pumps. I feel like I could have never imagined how much would change in our favor in the policy landscape since that time. So there's now a 30% federal tax credit. So for every homeowner who buys geothermal, they just get 30% off of the price from that. The utilities have incentives that are worth $10 to $20,000 that go to the homeowner. And there's just like so much talk about heat pumps all the time, which is great. So that has been hugely helpful. But in addition to that, I think one of the things that was making geothermal very expensive in the past in the US is that because it was so niche and so infrequently done, every time geothermal system was put in, it was kind of like a highly customized.”
2023-06-08 · How I Built This with Guy Raz · Tapping the heat beneath your feet with Kathy Hannun of Dandelion Energy · IDENTIFIED FROM THE TRANSCRIPT
“Our promise to the homeowner then and now, to be honest, is just you're a homeowner, you just want to buy a heating system that works. And so we'll come in, tell you how much you'll save by switching to Geo in the same way a solar company, for example, would tell you this is your return on investment, this is how much you'll save. And then we'll do everything. We'll remove your furnace, do the right design for the geosystem, oversee the drilling, or today we do it ourselves. We today do everything ourselves. We install the heat pump, uninstall your furnace and air conditioner, and then get the whole thing permitted and inspected. We'll handle the rebates for you, right? Like we just want to make this simple for the homeowner. So we take on the complexity ourselves.”
2023-06-08 · How I Built This with Guy Raz · Tapping the heat beneath your feet with Kathy Hannun of Dandelion Energy · IDENTIFIED FROM THE TRANSCRIPT
“Did have to raise more money. It's true that having a model where insourcing the labor is more capital intensive, but the economics of each install were also much better. So it ended up being a financial net positive for the company, even though it did require us to raise the money we would need to lease the warehouses and the vans and that type of thing.”
2023-06-08 · How I Built This with Guy Raz · Tapping the heat beneath your feet with Kathy Hannun of Dandelion Energy · IDENTIFIED FROM THE TRANSCRIPT
“Learned so much more quickly because we were actually doing all these things ourselves and truly understanding what all the problems were. So yeah, it was a very meaningful decision point in the history of the company.”
2023-06-08 · How I Built This with Guy Raz · Tapping the heat beneath your feet with Kathy Hannun of Dandelion Energy · IDENTIFIED FROM THE TRANSCRIPT
“Really, you don't have that many options if you want to keep going, except for just trying to insource that workforce. You know, like what else are you really going to do? So we had been, or at least I should say I had been trying to avoid that truth for some time because it was frankly intimidating to think about leasing a warehouse, hiring electricians, plumbers, and HVAC professionals, figuring out all the vehicles, right? Like I didn't think of myself as somebody who could know how to run a true HVAC company in that way. But we had this call and it was kind of like, well, this is what it's going to take. And so we made the decision to do it. And I'm really glad we did because it allowed us to grow the company, improve the customer experience so much, improve the economics of our installs.”
2023-06-08 · How I Built This with Guy Raz · Tapping the heat beneath your feet with Kathy Hannun of Dandelion Energy · IDENTIFIED FROM THE TRANSCRIPT
“I remember this decision point because I was actually on a hike with my dad and my mentor, Dan Yates, who is chairman of the board at Dandelion, he called me and I took his call and we sort of acknowledged this truth to each other. Like this model isn't going to work. And it was kind of clear that if the subcontractor model isn't going to work,”
2023-06-08 · How I Built This with Guy Raz · Tapping the heat beneath your feet with Kathy Hannun of Dandelion Energy · IDENTIFIED FROM THE TRANSCRIPT
“Mispriced at the very beginning. So we were also, the more we sold, it was sort of like the deeper the hole we were digging for ourselves. So those were the early years.”
2023-06-08 · How I Built This with Guy Raz · Tapping the heat beneath your feet with Kathy Hannun of Dandelion Energy · IDENTIFIED FROM THE TRANSCRIPT
“Yes, that was the typical price of GEO actually quite a bit higher than that in the markets in New York that we started in. We went in with a much lower price, but we were not making money at that point in the company. But I will say the one thing that was going really well, even from day one was people wanted to buy the product The upfront cost point we launched with a financing option. So from the beginning, homeowners that signed up with us would come out ahead like you could come out cash flow positive against fuel oil. There was just like overwhelming demand, which is great, but also in itself created problems for us because we just didn't have the contractor network to support that demand. And we had.”
2023-06-08 · How I Built This with Guy Raz · Tapping the heat beneath your feet with Kathy Hannun of Dandelion Energy · IDENTIFIED FROM THE TRANSCRIPT
“Own customers that they're always going to treat before ours. And so that led to a lot of customer experience issues, as you can imagine. And the economics of it were also very difficult.”
2023-06-08 · How I Built This with Guy Raz · Tapping the heat beneath your feet with Kathy Hannun of Dandelion Energy · IDENTIFIED FROM THE TRANSCRIPT
“Yes. We ran into so many problems. I guess to start, the hypothesis we had when we spun out and started the company is we're going to create a marketplace. We'll contract with HVAC installers. Will provide the heat pump and do some of the drilling because we were testing some different ways we could approach that problem at that point. And that will be the company. So we raised the money. I moved to New York. We made the commitment. It's sort of a one-way process. And then it became obvious that that vision was not going to work. First of all, the partners, the HVAC contractors we had chosen were not used to selling geothermal, of course, because they did not sell this product. And so it quickly became clear, okay, we're going to have to sell this product. So we hired sales leader. Then we realized, you know, even when we sell it and pass it along, like these contractors need a lot more support than we're giving them. And it's not their priority because they have their own business and their”
2023-06-08 · How I Built This with Guy Raz · Tapping the heat beneath your feet with Kathy Hannun of Dandelion Energy · IDENTIFIED FROM THE TRANSCRIPT
“That you'll have in starting the business are very minor compared to that central problem. You know, like if you can really make a car that drives itself perfectly, you'll be able to figure everything else out and it will be an incredible business. And for geothermal heat pumps, it involved things like drilling deep holes in homeowners' yards. It was operationally intensive. And I should also mention you didn't need a billion dollars up front to get started. It was the type of problem that seemed like it would benefit a lot from iteration. And you could actually get started without a lot of capital. So it just was better fit to be a startup than to be something incubated with an X.”
2023-06-08 · How I Built This with Guy Raz · Tapping the heat beneath your feet with Kathy Hannun of Dandelion Energy · IDENTIFIED FROM THE TRANSCRIPT
“It was becoming increasingly clear sort of over 2016 that this is an idea that could go somewhere. A lot of the checks we do on is this going to work. We're coming out pretty positive, like surprisingly so. I was used to going through so many ideas and finding sort of the thing that seemed hard to overcome. But with this idea, it was like the more I looked, the more convinced I became that there was nothing fundamental holding this back. The issue was, you know, X really looks for a very specific type of project, their ideal project is something like the self-driving car or Waymo, where you have to invest a lot of money up front to create ideally something software or software adjacent like a self-driving car. And then once you solve that technical problem, all the other problems.”
2023-06-08 · How I Built This with Guy Raz · Tapping the heat beneath your feet with Kathy Hannun of Dandelion Energy · IDENTIFIED FROM THE TRANSCRIPT
“This was something that we iterated on quite a bit in the early years. We experimented with a few different types of rigs, but we ended up taking a trip to Sweden, which you mentioned. It's sort of the geothermal capital of the world, 20% of homes in Sweden use geothermal heat pumps, pretty much all new homes going in use them. So they've managed to bring the technology to scale. So we made a trip to Sweden. The companies that do this there were actually extremely helpful in sort of teaching us, here's how we do it. Here's the equipment we use, here's our process. And we've imported most of that back to the United States and really adopted the same rigs they use over there.”
2023-06-08 · How I Built This with Guy Raz · Tapping the heat beneath your feet with Kathy Hannun of Dandelion Energy · IDENTIFIED FROM THE TRANSCRIPT
“So it's just like you couldn't even start. And so we needed to find a way of putting these ground loops in that was compatible with just a suburban home where you wanted to keep the areas neat.”
2023-06-08 · How I Built This with Guy Raz · Tapping the heat beneath your feet with Kathy Hannun of Dandelion Energy · IDENTIFIED FROM THE TRANSCRIPT
“That's right, the challenge was the types of drilling rigs that people used for geothermal in the United States were the same rigs that were used for water wells. And they work well for rural homes with a lot of land and homeowners who don't mind if a giant truck with a very heavy drilling rig drives onto their yard and sends mud everywhere. But a lot of our homeowners did mind and also didn't even have the land. So it's kind of...”
2023-06-08 · How I Built This with Guy Raz · Tapping the heat beneath your feet with Kathy Hannun of Dandelion Energy · IDENTIFIED FROM THE TRANSCRIPT
“Yes, so cold is just the absence of heat. So the way an air conditioner works or the way geothermal heat pump works is you'll have the whole system run in reverse. And so you use that refrigerant again to absorb heat from your home. And then in the case of a geothermal system, the hot water where the heat has sort of been dumped is running through that 55 degree ground and dissipating into the ground.”
2023-06-08 · How I Built This with Guy Raz · Tapping the heat beneath your feet with Kathy Hannun of Dandelion Energy · IDENTIFIED FROM THE TRANSCRIPT
“With the air that you're going to send through your house so it heats the air to let's say 100 degrees or so. And then you just send that air through your house as you normally would. It sounds really complicated when I say it like that, but it's a very common technology. Again, every air conditioner, every refrigerator works in this way.”
2023-06-08 · How I Built This with Guy Raz · Tapping the heat beneath your feet with Kathy Hannun of Dandelion Energy · IDENTIFIED FROM THE TRANSCRIPT
“So it's the same exact technology that you would find in a refrigerator or in an air conditioner. But the way it works is that 55 degree ground will bring that water running through it to 55 degrees. Then that 55 degree water will go into the heat pump and pass through a heat exchanger where it will exchange its heat with a refrigerant. That refrigerant's been specially selected to expand and sort of vaporize at 55 degrees and then it's run through a compressor which uses electricity. To compress the refrigerant. And so basically, when you compress that refrigerant, the temperature goes up. So now you have a very hot refrigerant. You can pass that through another heat exchanger.”
2023-06-08 · How I Built This with Guy Raz · Tapping the heat beneath your feet with Kathy Hannun of Dandelion Energy · IDENTIFIED FROM THE TRANSCRIPT
“So you basically need two components. You need what are called ground loops, which are just plastic pipes buried in the ground. They typically extend 200 to 500 feet into the ground, and they're only inch and a quarter in diameter. So they're thin, but they go pretty deep. So you'll have one or two of those. And then you'll have a heat pump, which essentially looks like a furnace, and it goes where your furnace was. And that will be typically in your basement or in your utility closet. And then you need to connect them so it can feed water to that heat pump in the house”
2023-06-08 · How I Built This with Guy Raz · Tapping the heat beneath your feet with Kathy Hannun of Dandelion Energy · IDENTIFIED FROM THE TRANSCRIPT
“Well, I'll be cold. You know, it's like probably not. You have to pay it. Whereas if you invest in putting in ground loops, and we can talk a little bit more about what that entails, but if you invest in that infrastructure so that you can access all of that free heating energy that's already in your yard, then you can draw on it essentially forever because the ground loops are going to last as long as you're home.”
2023-06-08 · How I Built This with Guy Raz · Tapping the heat beneath your feet with Kathy Hannun of Dandelion Energy · IDENTIFIED FROM THE TRANSCRIPT
“Yeah, I think you're exactly right that you have a subscription to heating oil or natural gas or propane that you just have to pay. Because for most people, it's not an option to just say, you know what, this is getting a bit expensive.”
2023-06-08 · How I Built This with Guy Raz · Tapping the heat beneath your feet with Kathy Hannun of Dandelion Energy · IDENTIFIED FROM THE TRANSCRIPT
“If you look at, for example, in the Midwest, comparing using a fuel to using geothermal, your operating cost, so how much you have to actually spend to heat your home, it's maybe a fifth with geothermal. It's similar in the northeast, and emissions wise is similar. It's a huge decrease. And so then, of course, it's like, well, why don't people use this if it's so inexpensive and so clean? And the answer is very clear. It's just geothermal heat pumps are very expensive to get up front and we're very not just expensive, but like for most normal people, very difficult to know how you would even go about getting one because it was such an uncommon product.”
2023-06-08 · How I Built This with Guy Raz · Tapping the heat beneath your feet with Kathy Hannun of Dandelion Energy · IDENTIFIED FROM THE TRANSCRIPT
“And it was actually so striking and so surprising how much value would be created by switching people from what they used today to geothermal.”
2023-06-08 · How I Built This with Guy Raz · Tapping the heat beneath your feet with Kathy Hannun of Dandelion Energy · IDENTIFIED FROM THE TRANSCRIPT
“I was just hunting around for what is a project that would make a big impact on climate and buildings are responsible for about 40% of greenhouse gas emissions, heating and cooling is more than half of that. And it was clear then, as it is now, that heat pumps are going to be the answer. That's the way you electrify heating efficiently. And there are two types of heat pumps, air source heat pumps and ground source heat pumps, also called geothermal heat pumps. And they both have a big role to play. But what we did was we did an analysis where we just ran the hypothetical if all homeowners, we focused on homes, residential switched from using whatever heating fuel they use today to using heat pumps, geothermal or air source, how much value would be created. So just looking at the difference of operating cost.”
2023-06-08 · How I Built This with Guy Raz · Tapping the heat beneath your feet with Kathy Hannun of Dandelion Energy · IDENTIFIED FROM THE TRANSCRIPT