Edward Fenster: Operate Out of Your Comfort Zone
The co-founder of Sunrun discusses winning over regulators, and lessons learned.
Edward Fenster is co-founder and chairman of Sunrun, which provides solar energy to homeowners. In August this year, Sunrun began trading on Nasdaq under the symbol RUN. The company operates in 15 states and has installed $1.8 billion worth of solar energy systems.
Fenster studied computer science before switching into finance and working in private equity at Blackstone [and corporate development at Asurion]. He earned his MBA from Stanford Graduate School of Business in 2007.
In 10 words or fewer, what is the big idea behind your business?
Edward Fenster | Courtesy
Edward Fenster | Courtesy
Homeowners will buy solar power if it’s cheaper and easy.
What are the biggest challenges unique to your business?
How multidisciplinary it is. There are a lot of things you have to do right: market, sell, install, finance, service, hire. The many companies that have failed in our industry usually miss one or two, but not always the same one or two.
We also face real regulatory challenges. For a long time, utilities didn’t think we could be cost-competitive without unreasonable subsidies. Then they realized we were a serious competitive threat. Then their trade group launched a national campaign against rooftop solar two years ago. But voters supported rooftop solar because it’s freedom from state-sponsored monopolies, and that support was powerful. Now some utilities are finally thinking about how to profit from rooftop solar rather than just how to stop it.
You started a company in an industry with rich, powerful competitors and high regulatory hurdles. How do you, as an entrepreneur, upend the balance of power when you begin with little money and no power?
If you win the support of the public and the media, you can beat wealthy adversaries with asymmetric warfare. Two things create regulation: One, products the government feels it needs to regulate because they are viewed as human necessities, like electricity, health care, or air-travel safety. The other type of regulation is rampant and not as well-understood. It comes from existing companies creating moats around their franchises. Regulation often starts with good intentions, but there are many industries that have entrenched themselves behind unnecessary regulation, too.
The most effective way to neutralize that power and influence is two-fold: You need to be careful to maintain the moral high ground and be viewed as the underdog. Second, you need public support.
We enjoy a few of these: People perceive solar to be magical. We also represent freedom from state-sponsored monopolies. It’s a great David and Goliath story, which makes for good media.
What is the best advice you’ve ever received?
My CFO told me that when he graduated from Harvard Business School, his professor told him about two-thirds of his class would end up divorced. Clay Christensen studied this effect. When you are driven by accomplishment, you end up staying at the office late each night, because it’s easy to measure the resulting accomplishment and the damage to your relationships is very minor. But if you repeat that for years in a row, the compound effects on relationships are real.
What was the most difficult lesson you have learned on the job?
The greatest Achilles heel I have had to overcome is how I react when people — myself included — make a forced or careless error: a failure of effort and common sense. I am trying to learn to approach those situations with compassion. One time in particular, we were facing a very important legal proceeding. Two senior people who should have known how to proceed didn’t put the effort in that was appropriate and necessary. My blunt reaction to their lack of care was very de-motivating to them. I should have just asked a series of questions to lead them to the right answer and figured out how to get their heads back in the game. The motivation people have when they are enjoying their work is invaluable.
What advice would you give other entrepreneurs on how to build a great business?
What scares me right now is that entrepreneurship is in vogue the way finance was in the ’80s and ’90s. But it’s really hard. Once, I put on 20 pounds. I got divorced. Entrepreneurs are held up on pedestals today, but it’s not a good fit for everyone. I thought all I had to do was work hard and have the right answer. I wasn’t prepared for the emotional rollercoaster. People also think you can control your own schedule. You don’t. There were real costs to get here.
If there was one thing that has enabled you to be successful as an entrepreneur, what would it be?
I try to bring humor to everything.
How do you come up with your best ideas?
They show up in the back of my mind when I’m doing something unrelated: spending time in the mountains, or listening to music. Even at Burning Man.
What is your greatest achievement?
I figured out five years ago the reason I love business is that I approach it like a serious game. I want the company to succeed, but my personal self-worth isn’t related to my professional success.
What do you consider your biggest failure?
Not spending more time with my family, particularly my sister’s family and my mother. Early on I approached Sunrun as a tour of duty, but it has turned out to be a steady state. The balance is difficult and important.
What impact would you like to have on the world?
I believe rooftop solar is the best bet we have at arresting global warming, and I like our chances.
What was your first paying job?
I wrote for the newswire at Bloomberg one summer. My desk was 30 feet from Michael Bloomberg. The office was set up like a trading floor. He was the first person I saw in action who was thoughtful about the EQ side of management.
What are you trying to balance, and how is that working?
To stay engaged and happy, I need to operate slightly outside my comfort zone. If I get too far I become incompetent, and things can fall apart. If I stay too safely within my comfort zone, I get bored.
What is the best business book you have read?
I hate business books. I am obsessed with intense nonfiction and disaster books, like Too Big to Fail,about the financial crisis; Fatal Storm, about the deadly Sydney-Hobart yacht race;and Day One, about the creation of the atom bomb. I think you learn a lot reading about people in very trying circumstances.
What businessperson do you most admire?
What do you think is the greatest innovation in the past decade?
Advances in medicine and biotechnology, like in our understanding of the human immune system. Gadgets and apps are great, but in the end it’s health that matters.
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