Energy waste in homes and small businesses cause geopolitical instability and destroys over a hundred billion dollars every year, and worldwide demand is increasing fast. Below is some DOE data from 2010, among other things.

Analytics can help reduce global energy demand and consumer bills by telling people how to consume it more intelligently. Control software can even take the appropriate actions for the consumer. We're starting to see the emergence of technology enabling people to: 

• Automatically turn things like thermostats, lights or power sockets off or down when they're not needed 
• Make the right tradeoffs between purchase price and operating costs when buying new appliances
• Identify behavioral changes that are low effort and yield big returns such as making minor changes to how you drive your car

But, who wants this and how will it be distributed? On a micro level, the average household's energy costs are so small ($4k on average across electricity and fuel) that any direct to consumer product aiming to reduce them needs to deliver something beyond just savings. Building such a product i.e. delivering an experience rather than a painkiller isn't easy. But, there's a huge upside.  If you succeed in establishing a popular destination that helps people make energy related decisions, then you're able to drive transactions in a market projected to be worth >$50B/year by 2014 (in the US alone, home energy efficiency improvements only, Pike Research). 

Hug spent most of 2010 testing a lot of different product concepts. We tested some using pen and paper, some using Adobe Fireworks and some really promising concepts using software (and during the first months, hardware) prototypes. Our goal was the same as for most early stage consumer internet products: achieve and prove product/market fit fast and cheap. We looked at solutions to problems in three different product categories:

The approach we took was somewhat unique as noted by Cleantech Open in which Hug was a semifinalist, and the Cleantech Group below. We focused on building a free Social Energy Analytics product requiring almost zero effort to adopt, delivering both financial savings and an emotionally satisfying experience.

By Q4, we had an alpha up and running that was a first attempt to achieve product market fit for #1 - it was a free desktop application that would instrument the power consumption of your computers, printers, monitors, etc and feed this data back to hugenergy.com for analytics and normative messaging. You can think of it as a Trojan Horse for energy management. The idea was to start building a user base before the smart energy devices hit the market, so that we'd be in a great position for becoming the leading supplier of analytics and control software once they had arrived. This prototype and our plans for #2 and #3 were presented to investors in Q4.

The deal attracted a lot of interest and some convertible notes were signed, but we ultimately failed to find a lead investor willing to commit enough capital to fill out the round with follow on investors. The investment community's perspective on this space had become significantly more critical since we got started, and probably for good reasons. A lot of capital has been destroyed in Series A-Z rounds of funding by our competitors, and most investors made it clear that they'd want to see massive traction before committing capital. They were taking a "wait and see" approach.

At this point our team had a 7 month runway and a lot of data about the users and the market. Armed with this, we started to look for an even more capital efficient path to success. Unfortunately I didn't see one with high enough probability to feel comfortable proceeding and given this I decided to wind down the corporation.

Knowing when to push through and when to call it quits is probably one of the hardest things for an entrepreneur, and while I'll never know for sure, I feel quite confident that this was the right decision for everyone involved. I spent ten years pushing through to help build Prover into the world leader in its market, and would have done the same with Hug under similar circumstances.

So, I'd like to thank everyone that believed in and supported us throughout the often rough, but always exciting, roller-coaster ride this has been. The team, our families, our amazing group of investors and advisors, the users that have patiently participated in product experiments, the bloggers and traditional media outlets that wrote about us, collaboration partners, and our newfound friends from AngelPad. You know who you are. I'd also like to wish the other people that still remain in this space good luck if for nothing else selfish reasons. I want to see scalable technological solutions to the energy crisis. And we need them.

One venture is dead, and after my sabbatical another one will likely take its place. I've been doing startups since 98 because I love building things. And few things are more exciting to build than a technology company. I don't see this love fading any time soon, but for some time I'm going to enjoy an empty todo list, adequate sleep and the wife and friends that patiently waited for me to emerge from my entrepreneurial cave.

To Hug!