NPV

Hi y’all - I’ve been working on NPV with Naina, François, and Chuck lately, and I wanted to summarize a few thoughts and possible lessons-learned that have come up in various discussions. Don’t forget to take the survey on Slack after!

1. Back-end / front-end divide is a force for good. It’s good to have clear responsibilities and having the calculation done in one place and passing in values for display to the front is great. We just have to be very clear on what duties belong to which!
2. The bags of letters is an alligator-filled swamp. We have to remember to look where we’re going! Each thing in the bag of letters means something very specific to someone. We need to be on our toes to make sure we’re not getting loosey-goosy.
3. It’s really important to know what the customer is trying to do. Over the weekend, I ended up texting Josh Eisenberg to ask him whether he would look at all future projects discounted to today, or if he would look at the PV of each project. His answer was….“depends.” But probably, discounting to current year. FSE has said they want a cashflow to 2040, regardless of year of the project, which is a very unusual comparison to be doing for an owner (coop) that won’t be selling the building in 2040. If we do the FSE request, it wouldn’t work for Josh. So, who wants what and why is very key.

On the topic of NPV, here’s my quick (non-AI) recap of what this is all about. Being a child of a banker and a financial analyst, this was dinner-table talk, so I’m gonna give it to you in the way it’s lodged in my brain, which is at about middle-school level, despite the grad school refresher (Grad school taught me the mechanics and how to use a financial calculator, which I’ve now forgotten). Chime in with whatever I’m forgetting:

• Net Present Value: The “net” means that something (project costs) have been deducted from something else (revenues). Basically, I’m gonna spend X to make Y in the future. What is today’s value of Y-X?
• Present Value: Present value is the idea that a dollar tomorrow is worth less than a dollar today. You can think of this in a few ways:
  1. Risk. If I give you a dollar now, you have a dollar. If I say I’ll give you a dollar tomorrow, the dollar’s still a dollar, but there’s some non-zero risk that I might NOT give you the dollar. Maybe I meet the AC unit with my name on it, or I forget, or I’m a jerk and I owe that dollar to someone else. So, if I said “hey, lend me a dollar and I’ll give you a dollar tomorrow,” savvy you might say, well, I’m taking a risk here, so for my dollar today, I think you ought to pay me a dollar and a quarter tomorrow. You’ve just priced your tomorrow dollar. In short, a bird in hand is worth more than a bird in the bush.
  2. Opportunity cost. Alternatively, you might say, well, I was going to put this dollar into buying TP, which I’m pretty sure I can sell tomorrow for $1.25 because we know what happens with TP when we have shortages. So, to make me whole for my $0.25 profit that I would get if I did that, I think you ought to pay me $1.25 for the dollar I lend you today.
• Discount Rate: This is a rate representing the risk and/or the opportunity cost, which is how you transform tomorrow dollars to today dollars. So in the above examples, your one-day discount rate was 25%.
• Actually, the rate in the examples above, you might have noticed, is interest rate that you’d charge me for lending me a dollar – so you can see that if you value your dollar today at $1.25 tomorrow, then it’s the same as saying you value $1.25 tomorrow at a $1 today. This holds true for calculations that span multiple periods (cash flow): discounting is the inverse of compounding.

The point of PV calculations is to be able to compare different streams of future money apples to apples. Survey time! Let’s say that for a buck you lend me today, I’ll either give you $2 at the end of 10 months, or $0.20 per month for 10 months. If you kept that dollar in your interest-bearing checking account, you’d earn annual interest of 5% on it. What is your gut instinct on which is the best investment?

• [A] Give me $2 bucks in a lump sum in 10 months.
• [B] Give me 20-cent monthly installments over 10 months.
• [C] Nah, I’ll keep my money in my bank.

Metrics

• Unique Buildings: 6,349 (+127 MoM)
• Annual Run Rate: $1.3M
• Monthly net burn (accrual basis): TBA after April books are closed this week
• Year-to-last-month net burn (cash basis): TBA after April books are closed this week
• 2025 Transaction fees to date: $9,276
• Outstanding invoices as of today: $89,924 (+$83,333 WoW - this is Willdan’s monthly payment)

Last Week’s Highlights

• Release 93 is out! A lot of changes needed to be cleared from the pipe, and it was a good test of the new commit/ticket process. Sigh of relief, and onwards! FH (+1 JB, BJ)
• We had a good discussion during the roadmap meeting about working on making things easier for KC3. They have a lot of fragile, spreadsheet-based processes that we think we can help with. More details to come, but it’ll be nice to have a clear set of users and problems in mind! (JB)
• Perm staff meeting discussion of the company radar. (BJ)
• great discussion with KC3, better defining process for how they will will use Momentum going forward to support managers and boards that must comply with Local Law 97 (MZ)

Any missing highlights? Please share in Slack comments.

Crow’s Nest

Looking out for icebergs: What are the risks on the horizon that we’re watching for and navigating around?

François’ List

• More of an opportunity than a risk, but I am excited about the prospects of tying together our projects to parse our users’ documents to extract building data, our improvements to the building detail page editor (transparency, traceability) to manage this data, and the new direction to automate the generation of documents (e.g fill in rebate forms) based on templates. My (unloved) analogy with TurboTax is rushing back to me.
• (repeat from previous weeks) Automated Testing: I’m convinced that reliable tests that run quickly and reflect our users’ experience are table stakes to move faster and with more confidence. Are we going to find the bandwidth to get this party going?

Jason’s List

Carryover:

• NYC Accelerator RFP--this would be a big contract and have impacts on revenue plan and product roadmap.
• How can we continue to reduce the barriers to giving users useful information? I’m eager to try scraping data out of pdfs and other documents so we can make it easier to get non-public information. Seems like a lot of potential use for this beyond getting a v0.
• Updating our project workflow. We have a better idea of who will be using this now, which is a great start. Now we need to confirm what features they need and those they don’t need. And we need get to away from the existing CPC CFHF code asap. <– I feel like we’re going to figure out the steps required to make this transition this week!
• More chatter about adaptation > mitigation. This feels both scary at the macro scale–have we missed the tipping point?–but also I think more difficult to streamline with software than decarbonization.
• CPC’s Climate Friendly Homes Fund program being capped at $150M instead of $250M. Apparently NYS had to use that money to cover some other projects in need. It’s still going to be a very impactful program, but it ending early is sad for at least a couple of reasons. We’ll need to shift focus away from new project intake to getting contractor costs in the system and program reporting.

Bomee’s List

• Getting Marc a product he can sell so close to getting NPV and logo out for FSE!
• Cash. We have a net burn that we need to minimize. But we still have a lot to build.
• NYCA – waiting…still
• ConEd Recompete in motion and now waiting.
• The background hum of uncertainty for the housing/construction industry. The predicted recession is not great news.

Marc’s List

• I don’t know what is happening with local dollars being redirected as a result of federal uncertainty but I hope this has no impact on NYCA!

Erika’s List

• Carryover from the past few weeks: PEO comps to Justworks and the cost of healthcare - a couple of options are out due to our profile (higher average age and claims) but we will have options this week (proposals were pushed back a week as I fulfilled additional underwriter requests).
• We are almost to mid-year, which is a good time to check in on our budget and see what adjustments need to be made, the impact of different scenarios on our runway and how we might reallocate resources. In general, the mid-year check-in is important for startups because it provides an opportunity to course correct before small issues become bigger ones, and for us in particular this check-in will help us to think strategically about our operations and business decisions over the second half of the year.

On Deck for This Week

• I’m a (small) part of a webinar CPC is hosting this week to discuss leveraging software tools to help with retrofit screening. It’s mostly focused on VeriFi, which is co-owned by CPC and Bright Power, but I’ll also get to talk through how they are using Momentum on the CFHF program. (JB)

• Customer discovery meeting with KC3 on Wednesday–I’m excited to get down to some details on the customer journey for their project needs, and maybe some discussion about their spreadsheet and incentive application needs as well. (JB)

• Kate’s 360! (JB)

• Public launch of the Urban Green Council’s (co-branded with us) website taht seeks to standardize compliance options for steam heated buildings based on Momentum analysis outputs (MZ)

• Kick off of L&M project demo with Con Edison that will use Momentum to better evaluate heat pump alternatives (MZ)

• NYSERDA workshop on owner behavior change. This is a day-long workshop that Marc and I will attend on Tuesday. Here’s what the person putting on the event said about it (BJ):

  The event will definitely be unlike anything that you typically see at a buildings conference or workshop. One thing you see when you look at the decision map (which is fourteen feet long) is how many important barriers to adoption your product removes.

• Sharing PEO/healthcare options with the team (EP)

• Here’s what’s on the Company Radar

Please Leave Feedback

Please note your reaction to this update in the Slack channel. It helps us to know what is resonating, what is unclear, etc. Thanks!

• What are your highlights / low-lights?
• Did we miss a highlight? Something else you want to react to?