Ben Freund

Well it is a bit hard to believe with those sorts of investors, although they are know as long-term investors so they are probably not in any hurry.

That’s right. One of the things I was told from the beginning is just focus and grow, don’t worry about the other things. Build the company and you have got our support. That is what we are doing. So we are thinking about building it not about selling it.

Fair enough. Is there a natural cap on growth in Australia? You were talking before about eight million accounts.

Residential accounts.

What sort of frequency might people start switching?

What we are trying to do is take what people are doing already and move it into to a more transparent intelligent environment.

So, 20% of all Australian residential energy accounts change hands every year. Now how does that come about? It comes about through doorknockers, through telemarketers, through other high pressured sales mechanisms, brokers, it happens when people move and when people move home people just connect to the default retailer for their postcode on a default plan and they just go to the most expensive or they just call up a brand that they are familiar with. There is constant movement already, all we want consumers to do is to perform a price comparison before they choose a retailer.

Are many of them doing that at the moment?

It is a tiny percentage of the marketplace. It is growing and growing quickly but it is still very small. It is very much niche. If you think that there are 30,000 visitors to our site every month, times it by 12, add all the other websites maybe you could say that there are 400,000 different price comparisons occurring every year. But the number of accounts changing hands is 1.6 million. A lot of the price comparisons that are being performed would be done by consumers who are not necessarily moving or looking to change and the people that are moving or looking to change are not looking at those price comparisons, so you might say that 90% of the market is changing their essential services without performing a price comparison. So the scope for growth is huge.

So looking forward, the growth opportunities are big, what are the big challenges? Is it still around educating the market? What are the other issues you see?

There are two challenges. One is just the level of consumer education and people’s confidence in our brand. You do need a certain level of confidence to switch brands online because it is an essential service and people have legitimate concerns is this going to get bungled, is my electricity going to get switched off? Or people saying I haven’t heard of this retailer, does that mean this retailer is risky? A lot of people don’t realise that all retailers are licensed and regulated by the Government so one is as safe as another, that the network distribution system is shared by all of them. People don’t know these things so there is still a lot of education and a lot of explaining that still needs to be done.

We also need to watch what is going to happen in New South Wales. The New South Wales Government has said that it is going to privatise and open the state wide-open to competition, real price competition like we have here in Victoria. It was off the table then it was back on the table but this time for real, now it is off the table and they are thinking about it again. So there are political forces at play. In Queensland the government sold the retailers but still maintains a certain level of control over consumer price caps.

Then there are other things that are happening, one of the things that is driving consumers to our site is the fact that their energy bills are getting bigger. They are continuously getting bigger and it is something of an unstoppable force, I mean energy bills will continue to get bigger for the foreseeable future, for the next 10 years at least. One of the things that is driving it is government intervention. Whether it is green targets, targets for renewable energy which have been doubled from 10% to 20%, whether it is an ETS, if it comes into effect or not is beside the point, there is a Federal intent to intervene in the energy sector from that angle.

Those are, well I wouldn’t say they are obstacles but these are things that we need to be mindful of, these are forces which are out of our control and affect the people that use our service and affect us. For example, when government went into and started subsidising the solar panels, a lot of people reached out to us and requested information on solar panels, there are things we do that doesn’t generate revenue but people do use us as an information tool. We get a lot of emails and calls from people asking about solar panels, well we have to tell our data analysis team to put that information together and publish it and we have to train our phone consultants to be able to answer those questions because they do get a lot of those questions. So the things that government does do affect us significantly.