Episode 121: Making heat pumps sexy with Quilt

Molly Wood Voice-Over: Welcome to Everybody in the Pool, the podcast where we dive deep into the innovative solutions and the brilliant minds who are tackling the climate crisis head-on. I'm Molly Wood.

This week, let’s keep it simple, shall we? Let’s talk about heat pumps. Yes, we will talk about them in the context of grid infrastructure. But we heard last week that these handy dandy little electric HVAC systems are quickly overtaking fossil fuel based furnaces. Last year, the U-S passed China to become the number one market for heat pumps.

They’re popular because they’re comfortable, high tech, efficient, quiet, and today we’re talking to a company that’s also making them sexy. Let’s do it.

Paul Lambert: My name is Paul Lambert. I'm the CEO and, uh, co-founder at Quilt. We are a home electrification company and we are making very, very efficient, uh, heat pumps to help decarbonize homes, uh, starting with, with, uh, HVAC. So we've made a, a very, uh, many people think, anyways, an attractive heat pump that is also, uh, very efficient. And, um, we're doing it to get people off fossil fuels in their home.

Molly Wood: So people will be, people who are listening in order to, uh, these episodes will be hearing you directly after Panama Bar, Panama Bartholomy of the Building Decarbonization Coalition, who gave the good news that heat pumps are really taking off in America. Can you, can you confirm?

Paul Lambert: Yeah. Uh, it's, it's true. And actually, even though there's been a slowdown on the HVAC industry overall, heat pumps are continuing to grow, both grow versus furnaces and grow, uh, and other fossil, you know, uh, like radiators and, uh, sorry, I mean boilers and also versus ACs. And, um, the AC one is, is really important because no one should really install a traditional AC anymore. It doesn't really make any sense. Uh, really an AC is just a half broken heat pump.

Molly Wood: Tell me, tell me more about that. 'Cause I feel like that will lead into a little bit of how heat pumps work, right?

Paul Lambert: Yeah. So, uh, a heat pump is actually kind of just a new term for an, for an old technology, which is basically what's inside an AC. Uh, it's, it can run in two directions and, the, I think one of the best ways to think about that is, um, obviously an AC will blow cold air. That's how an air conditioner works.

Um, your fridge is basically an AC as well. It's just, you know, acing the box that is, you keep your food in to stay cold and everyone knows the back of their fridge is, is warm. And the reason for that is the way these machines work is they're actually moving energy from one place to another. You're kind of picking up energy in one spot and moving it to another. So, um, if you run it forwards, which is what an AC normally does or a fridge normally does, you uh, cool one side and you heat the others, the, you know, the outside or the back of the fridge. If you reverse that, it's the exact same thing, exact same mechanics, but now you're creating heat on say, inside the box or inside your house and you're essentially ACing the outdoors.

Uh, and it's, it's kind of a funny idea, but it's, it's really the literally the same machine just working. Uh, there's a small valve called the reversing valve that just reverses the flow of the refrigerant. And, um, which is all to say that, it's like, it's like having a regular AC is just a car that can, can't reverse. And you should just have a reverse and, and now you, and now you can use it to heat in addition to cooling.

Molly Wood Voice-Over: So Paul is like a number of entrepreneurs we've had on the show. He is a serial entrepreneur, he was trying to figure out what was next. He went to work for Google, and  he was trying to figure out how to build a consequential lasting company, and as so often happens ...

Paul Lambert: I was on paternity with my second son about four years ago. He's four. So that's when it was. And you know what, that gave me the space to think about it. And it occurred to me that if I worked on the problem that I genuinely thought was the most important problem for my kids' generation, that you can't fail.

Because the very worst case scenario is that you spend 10 years of your life trying to make life better for your kids and the business doesn't succeed. But you're gonna have no regrets. Right? And you're gonna be very proud of having spent your time that way. And of course the best case scenario is you help solve the most important problem on the planet because by, by your own definition, that's what you're working on.

The other aspect of this is like, the part I'm from in, in Canada is Alberta, which is where all the fossil fuel industry is based. So most of my family worked in the fossil fuel industry or had some connections there. And, um, yeah, I just, I felt like I wanted be part of the solution and that's kind of the legacy I wanted to, to leave for my own kids. And then, you know, essentially selling oil, put food on the table when I was a kid. So I wanted to, you know, be part of, uh, that, bringing that story to a positive conclusion.

Um, so climate change is a problem. What can someone like me do to, you know, impact this global massive, you know, daunting problem? And I've spent my whole life making consumer technology. So I wanted to start with that and said, well, um, I know that I could build a world class team around consumer tech. I was coming from Google, you know, all these things. And um, what is the solution of climate change? It's the energy transition. It's getting off of fossil fuels and onto electricity. Cool. Where do consumers buy fossil fuels? We're gonna have to dis, displace those.

Molly Wood: Yep.

Paul Lambert: And the answer is only two places. Their car and their home. And that is a remarkable insight because consumer spending is most to GDP. It's like a gigantic part of the economy, and yet there's only two problems you need to solve. And at the time I was thinking about starting this, Tesla had just passed a trillion dollar market cap.

Everyone was so excited about the EV transitioning happening. Great. That needs to happen. Awesome. By almost any metric you can pick, the home side is more important. More total emissions. People spend more time on it. They invest more into their homes. They're just, they're, they're more important.

Um, and, and so, and, and the sort of in, IQ points, design thinking, VC dollars, talent, all these things like going into decarbonizing the home was a fraction of what was happening on the, on the car side. So it felt like that was a big opportunity. And then it's like, great. Hey, where do you start in the home?

Well, what's the biggest energy, uh, consumer in the home? HVAC is half of all energy and 70% of all fossil fuel use in the home. By far the biggest, uh, you know, lever to start with. So that's where we started. And it's like, well, what's the state of the, what's the game plan today? The game plan has heat pumps for all the great reasons that, um, people on the, on you listen to your show probably have already heard of why heat pumps are great. Uh, but they, they were in this state where it's like they're great on paper. Like they're very efficient and you know, all these great things to a policy maker, they seemed great, but to an actual consumer, there was still a lot to be had, like they just weren't, they weren't, uh, inspiring, attractive consumer products.

And you know, the best analogy for this is really what, what Matt Rogers and Tony Fadell did at, did at Nest, right? They, it's the same kind of category. They realize that a thermostat, um, is actually this HVAC system in your home is a place that's really ripe for, uh, for brand, for technology, people touch it almost every day. And it is a category that if you put that, you create a desire around it, not just a push, you can really, you can really accelerate the transition. So that's what we're trying to do, rather than just having policy push, which is great tailwinds around the whole heat pump transition.

And obviously there's been a few challenges at the federal level recently, but actually on a state level there's still a lot of great support. Um, we also wanna create a pull, and that pull is actually very durable, right? Because it doesn't really matter, um, necessarily what party is in the office. If people want the product, they're gonna buy it, so…

Molly Wood: Right.

Paul Lambert: Yep.

Molly Wood: Um, so let's, I, I feel like as we set up why it's important to create a product that people want, this feels like a good time to tell people what the the heat pump installation experience is because I think for most people who are just familiar with a furnace, it’s in a closet. There's not a part of it that you see. Whereas the heat pump installation is more like a mini split situation. It's like on the wall, in your rooms, right? There are parts of it that you can see? Like explain why it's important to make it look good.

Paul Lambert: Yeah, so there's actually a bit of a gotcha there. So not a gotcha, but it's, um, yeah..

Molly Wood: Great. I mean even those of us who care, still don't totally, you know, I'm like, I’ve looked at 'em and I'm like, okay, maybe there's gonna be mini splits, but I don't really know. And there'll be a box outside, but I'm not sure where.

Paul Lambert: Yeah. So there's basically two form factors or two, uh, classes of heat pumps that someone might use to, you know, heat and cool their home. One is called ducted and it uses ducting and it has a thermostat, um, is what most people, especially on the West Coast America and central, uh, central part of the country, Northeast, south east radiators. But you know, most people in America use ducting. You have a furnace or centrally blows out through your ducts, so you use a central thermostat. Cool.

That still exists for heat pumps. You can still get a centrally ducted heat pump. It's exactly the same thing as your centrally hot, uh, ducted, ac. Anyone who's ever had central cooling in their house. It just can reverse to create heat.

Molly Wood: Okay. Mm-hmm.

Paul Lambert: Pretty straightforward.

Molly Wood: Goes in a closet.

Paul Lambert: Yeah, it goes in a closet.

Molly Wood: Can look like whatever.

Paul Lambert: Yeah, doesn't matter what it looks like. Really, your interface is the thermostats that's on your wall and you could use an Nest or an Ecobee, often people are using the, for technical reasons, I probably don't, don't need to get into, um, the more advanced heat pumps work better if they have the brand that makes the heat pump’s own thermostat. So you're using like a trained thermostat or, or carrier or Mitsubishi or whatever.

Okay. Then there's a second one. The second class of heat pumps is this thing called mini-splits or ductless, just no ducts, duct-less. And, uh, the reason that this is sometimes a gotcha is that this class of form factor can only exist with heat pumps or ACs. 'Cause uh, what it does is that it, it puts a single unit in every room, and it's usually high up on the wall.

And, um, in many parts of the world, particularly Asia, but other parts as well, these have become very, very popular, especially for acs. Um, 'cause the housing stocks there don't, don't have ducting. Um, but in America, people often had ducting, so it didn't really take off as much, but there are a lot of benefits to it.

So when you have room by room control, for one, you're gonna have different temperatures in each room. So you know, if a kid wants to sleep at a different temperature than a parent, you can do that. You also save a lot more energy 'cause you don't have to waste energy on empty rooms. Like you don't need to be heating your living room while you're sleeping all night in your bed. But people will do it if they have central system. And so there's a lot of benefits to it. Uh, but, it's only possible if you're using a heat pump 'cause you would never have a flame in a box in every single room of your house, it's extremely dangerous. Nothing would permit that. Um, but heat pumps are safe.

So heat pumps have actually like enabled a new architecture, like a new fundamental approach to the way we can heat and cool homes, which is this room by room system. That's also a reason why Quilt started that way. In that, uh, you could most take advantage of the unique advantages enabled by heap- heat pumps.

Like, so the energy savings aren't just that Sears score, it's the fact that we're not wasting any energy while you're sleeping in your living room. And you can't do that if you have a ducted system, or at least it's much harder to do. Um, not to say we'll never, you know, we'll never get into that. It's just we felt like, uh, we wanted to start where we could really, uh, really flex the strengths of what heat pumps enable. Um, but those, those products, they tend to be white plastic boxes that have been the same for decades and one of the biggest..

Molly Wood: Yeah, like you’ve all seen them in a hotel, basically.

Paul Lambert: Yeah.

Molly Wood: Yeah, you’re all picturing it and you're like, Ooh, I don't really want that in the living room.

Paul Lambert: Well, and the funny thing that's very cultural too, because, um, as I said, in Asia, they're very common and you know, anyone who's gone to Japan or places like they, they certainly care about interior design over there, but they're so common that they don't see them as eyesores.

Molly Wood: Mm-hmm.

Paul Lambert: Sort of like you, just the water you, you grew up, you know, the, the water you swim in or whatever it is.

But to Americans, they're not used to them. So when they first see them, they say, this is weird. I'm not using a big box on every room. I just want like a little thermostat in my hallway. So one of the big objections to adopting this technology, even though it had all these benefits in the efficiency in the comforts, which people do care a lot about in their home, um, was the aesthetics.

So, we felt like we really needed to invest in creating a product that not just wasn't ugly, but actually had pull, 'cause the other thing, people do spend a lot of money on nice furniture and, you know, decorating their home. Like if you can create something that actually is additive to the wall and not just subtractive, um, you're going to, yeah, you kind of flip, you, you know, you flip the equation.

So that was really our goal. It was like, how do we create something that someone is proud to have in their home? And so the value props were bringing, uh, to our customers, is not just that you'll be more efficient and you'll be more comfortable, you'll be all the things, but also you're gonna be proud of it on your wall when your friends and family come over. And it'll increase the value of your home when you resell it and, and those kind of things as well, which we think, um, you know, will resonate with everyone.

Molly Wood: So talk about the, the kind of process, like how long did the design process take? When did you come to market? Where are you now?

Paul Lambert: Yeah. So, uh, June, 2022 is when the company was founded. And one of the first things, um, we did was try to find an industrial designer, design team that could help us envision what this product would look and feel like. Because I sort of knew if I was an investor on the side of the table, I, you know, you need to get that emotional appeal. You need to show somebody like, what is this gonna really be like?

And so we found a great design duo, uh, Mike and Micah. They're, uh, husband and wife, and they've got this small interior design studio, or not interior, sorry, uh, industrial design studio. And they're, they're fantastic. So we started working with them in, um, the summer of 2022, and then we raised our first, uh, capital that fall.

And we're kinda off to the races beginning 23 in terms of building the product. That's when we started, you know, hiring a team and, and really started going at it. So for all of 23 through the first half of 24 was development of the product. And it's a pretty complex product. It's not, you know, one thing in a box.

There's four separate things that come in boxes. So it's kind of four independent products from a hardware perspective. There's two things inside the home. There's the dial, or sorry, up on the wall. There's the dial, which is our thermostat. We built a whole smart thermostat ourselves. And then we also built, and part of it is that reason I told you earlier, is that we wanted to be able to take full advantage of the system and you couldn't just use an off the shelf thermostat to do that. And uh, and then we have the outdoor unit as well.

And then we wrote a whole bunch of software, right? An app and control systems and detection. So it spent, um, a year and a half engineering the product and developing it. And then, uh, we first came to market at the end of 24. So our very first non-pilot, non-discounted, like just full market sell was, uh, October 1st, uh, 2024.

And when we first launched, we did everything ourselves. So we did the installation ourselves. We had the, you know, we were a licensed HVAC contractor. Um, because we felt like we really wanted to understand the whole thing, end to end and get really, you know, quick feedback from customers and just be really close to our customers when we were, uh, first bringing the product, you know, into the world.

And luckily we learned people love it and it, it works really, really well. And that bought us the platform from which we could scale. Because as much as doing everything yourself is great for learning, it really gets in your way in terms of how fast you can scale because you know, you've gotta hire contractors and get a warehouse and get vans in every single city. And that takes capital, and that takes time.

And um, so, uh, once we knew that we kind of had this lightning in a bottle, we, in early 25, so end of last year, uh, basically exactly a year ago, uh, switched to our current model, which is we partner with really great contractors all around the country, and they're our partners and we really do think of them as partners.

So they'll, they'll buy inventory for us, but we also give 'em a bunch of tooling. We'll send them business, we send them leads, and we work together to build their Quilt business. And so, um, we are in well over 20, uh, states and provinces now, and we've, you know, grown very, very quickly over the last year, uh, thanks to this new model.

Molly Wood Voice-Over: Time for a quick break. When we come back, we'll talk about the design, the price, and how Quilt also, in keeping with our conversations lately, helps act as grid infrastructure so we can meet our power needs without compromises or higher prices.

Welcome back to Everybody in the Pool. We’re talking with Paul Lambert of Quilt.

Molly Wood: That seems, um, it's remarkable how often everything comes back to that, right? Which is that without installers, without their buy-in, without their education, and without them talking to consumers, nothing happens. So how, like, what was the moment of realization and then how do you recruit those partners?

Paul Lambert: Yeah, so the moment of realization I think was, um…

Molly Wood: I mean, scale. Which you just said.

Paul Lambert: Yeah. I mean, so we had this long wait list. We, we had a wait list across the whole country from the time we announced the product, which is great. And I sort of just did the, the math on how long will it just take us to get our product out?

All the people out there asking and wanting Quilt in their home and our mission is to help get homes off fossil fuels. And, and, and we were getting in our own way of accomplishing our mission. Where we had all these people who wanted to get rid of their furnace and put in Quilt and we couldn't get to them 'cause of our own business model.

And so that was, you know, that was really kind of the, the, the nail in the coffin, if you would, on that model. But, uh, we also got a lot of inbound from partners. Once they saw that it was working, we had this new product, they're excited, right? They, they like, Hey, this, can I sell this? It's gonna, you know, no one else is carrying this in my town.

And, and you know, one of the things that the partners are most excited about is that we give them differentiation because the product category is very generic and so they know that their competitors are gonna walk in with, they might have different labels on them, but they all kind of look the same. When the Quilt is very unique, and therefore it's gonna give them a competitive advantage over their competition because they're representing this unique product. Um, and that's kind of the tip of the iceberg. We also do a lot of things to like improve their business processes and like I said, send them business and stuff like that.

Molly Wood: Got it. I figured there was some partnership.

I should have asked this earlier. Is the outside box also better looking? Because I will say, I have a heat pump for my pool and which is funny, like I don't have one for the house yet. We're working on that. But I do have one for the pool and it is not cute. It's not a good look, it's not a pretty box.

Paul Lambert: Quilt doesn't make ugly products.

Molly Wood: Figured. Um, okay, so there's, so you have this sort of, these key differentiators. It's better looking, uh, the, the partnership with installers is key to adoption. I wanna talk about the smarts that are built into it because it's also a very, technically, it's also a very high-tech platform. 

And one of the interesting conversations we've been having over time with utilities, with companies like SPAN is what that enables in terms of energy writ large. In terms of grid reliability and demand response, where consumers actually get maybe some money back for saving energy, like the Nest has that program built in.

Paul Lambert: Yep.

Molly Wood: Um, so I wonder like how, how are you approaching all of that? Because you're all like grid infrastructure basically, once you’re installed.

Paul Lambert: Yeah, nocompletely and, and in fact, as I mentioned, the largest energy load in the home is the HVAC, so we now can wrap the largest, the largest load in every home in intelligence and in, in controls. And, uh, so this is something that's been part of the, part of the plan from the beginning. Um, our system is internet connected.

Uh, I'd say of course, but you, maybe not of course. So there's actually still to my knowledge, no other mini split that you can go buy that's, you know, interconnected outta the box. Usually you have to buy kind of an add-on thing and you gotta get a, you know, so-so app, if I'm being polite. 

And, um, and we've built a lot of what is like best in class from other places, automotive and others.

Um, so like over the year updates was, uh, something that we've now gained a reputation for really leveraging. No one else in the HVAC industry is doing that, but we actually pushed. And over the air update, that increased the capacity of our system. So people had bought 9,000 BTU systems and then they kind of overnight became 12,000 BTU systems.

Uh, and we got a lot of recognition for that because it was like, wait, how? How do you do that without changing the hardware? Well, we did it because what we, we were able to change the control system that is controlling the same hardware. And when we first, we were very conservative when we first put it out, and then we realized that hey, we can actually, we have, you know, higher confidence, we can run this at a slightly higher rate and you know, kind of, after very considerable testing. And, and so we enabled it at that level and it's performed great since we've done that.

But, um, so yes, we've invested in this ability over the updates and, but, and, and also the fact that you can control all parts of the system. So the compressor speed, the fan speed, all the things that use electricity, you can do it, uh, you know, remotely. That is most of the way to being able to plug into demand response already.

And one of the interesting things that we can do is, um, it's very unique to Quilt. It's 'cause we have this room by room control. When you're trying to shed load, normally what you have to do is, say it's a hot day in the summer and you want your house to be 71, you're gonna accept that your house is gonna be at 75 and you're gonna just deal with a little bit of uncomfort. Uh, and you're gonna, you know, get some cash back on that, maybe from your utility bill. And, and, and you're gonna feel good about having, you know, helped the grid.

What we can do is still keep the room you're at at 71. We'll just make the rooms that you're not in, um, a little more aggressively curtailed. So where before you walked in your bedroom, it'd only be two or three minutes to get back to speed.

Maybe it'll take 10 now, 'cause we're letting it drift further. But it's this interesting thing where you can actually curtail load without actually impacting comfort. And that is new in, um, in, in the HVAC, uh, you know, load curtailment, demand response space. Um, so we're really excited about that. And, uh, and in general, um, giving utilities, you know, behind the meter visibility into, uh, this energy usage in the home is, is something that we've, we've gotten a lot of interest in utilities.

Molly Wood: Yeah. Fascinating. Yeah, that was my next question, Is how, if at all, are you working with or talking with utilities? Directly or installers? Like do you have a relationship directly with utilities?

Paul Lambert: No. Yeah, it's, it's directly with a number of them. Um, so we've actually already done, um, some demonstration work with Portland General Electric in Oregon. Uh, they've been great. They're very, very innovative, very, um, which, you know, maybe you don't always hear associated with utility space, but they, they're, they're forward looking.

Um, but we have a number of conversations going on with multiple utilities around the country. Um. Yeah, I mean, they're all, you know, they're all working on energy efficiency and load flexibility and all those things are really important to them. So yeah, they tend to be willing to talk.

Molly Wood: Have you been getting more calls in the age of the data center? Like there's certainly a lot more conversation about curtailment.

Paul Lambert: Yes, yes, for sure. And in fact, we have a really unique value proposition for that in that, um, where people are using electric resistance heating. So what I mean by that is baseboard heaters or electric furnaces, they, um, there's a very, very clear path for us to make those homes way, way more efficient.

So even though it's not most of America, even if, if it's 10 or 20%, and if it's somewhere near a data center, um, heating with a Quilt heat pump versus, you know, baseboard heaters can save very significant energy. Sometimes, you know, one quarter or less the amount of energy to heat the home, so you can actually, um, uh, replace all the electric resistance heating with Quilt heat pumps, you've now freed up a bunch of load that was previously essentially being wasted and you can now sell that to the data center operators or the hyperscalers and that, do that instead of building new generation capacity.

So you hear, you hear this backlog of, you know, five years to get the new gas turbine. Like how are we gonna fulfill this, this demand from the data centers? Well, you can build new generation capacity, but you can also just take the, uh, capacity that already exists and make it much more efficient. And so we are working, um, with a number of them around that, those kind of ideas of how do we, you know, and that also displaces having to build new fossil fuel plants.

Molly Wood: I mean, I was gonna say, you're gonna feel real great if you keep new gas turbines from coming online.

Paul Lambert: No, for sure. For sure.

Molly Wood: That's a good gift to those children, is what that is. Yeah.

Paul Lambert: Thank you, yeah. It's, we're working on it. I, obviously that would be incredible when we get it done.

Molly Wood: Um, and then I talk about what else the future holds. Like you have sort of alluded to where you're starting with these residential HVIC systems and heat pumps. Like what, what, what could happen in the future, what's on the roadmap?

Paul Lambert: So, um, I kind of think about it in the large and the small, by which I mean like the big global problem we're working on is, uh, getting homes off fossil fuels and, um, you know, trying to help stop climate change. Pretty straightforward. It's the home that we all share. We wanna make that home a healthier, more sustainable happy one.

But we also care a lot about what I call almost like the day-to-day or the micro, which is like, if somebody has, uh, a better sleep because their room is right temperature, if their baby doesn't wake up as much at night 'cause they can control that temperature. Like those are important things. If someone has less friction in their day 'cause it's uh, more reliable to control the energy systems that, that drive their home and they can feel good about them, that's also, you know, important.

And also when I think about our partners, like a lot of these, our partners are, a lot of 'em are first generation immigrants. They're trades workers. They're like, I mean, they're honestly kind of the American dream, a lot of these folks. Like, they're just working hard and building businesses. And we also feel really good about, you know, helping them succeed.

Um, and so why I'm, where I'm going with all this is that, um, we're, what I see Quilt doing is kind of these like, standing for both these things. So at the large, um, we are a technology company about, um, energy, health and comfort in buildings.

So anything in that domain. Energy, health, comfort in buildings, um, that is going to directly drive our, uh, our climate mission. Because if we can get people all in electricity and then they get that electricity, uh, used in a much more efficient way, that's obviously, no news to you or your listeners, a massive, massive part of the climate equation.

Um, and then also those are, to use the water analogy, it's kinda the water we live in them. People spend 90% of their lives indoors. Some people find that stat very sad, but it just is a fact that we spend 90% of our lives indoors. And so the air quality, the thermal regulation, the systems you use to control those spaces are absolutely, you know, they're literally the, the, the world we live in.

So, um, we feel like by bringing innovation to that and a lot of what we, and, and design thinking and just upleveling those systems, we can bring a lot of value to society. And then, you know, something that we'd, we'd all be very proud to have worked on if we spent the rest of our careers at Quilt, uh, improving those systems.

Molly Wood: What do your, what do your internal metrics look like? When, like in the, in terms of the things that you were measuring in addition to like making money, um, but like, do you measure success in emissions or, you know, BTUs, like how do you, what are the metrics that you apply to the success of your product?

Paul Lambert: Yeah. So on the impact side, the, the closest one is homes electrified. Um, we, unfortunately, we just don't have great, great data anymore through the partners if we displaced fuel or not. But we usually have, for doing a whole home, like, you know, there are the electric resistant ones. But even that, like I said, actually has a, usually a huge climate impact. It's just not happening on the site of the home you are, it's having on the grid, right? If you're pulling a far less electricity.

Um, so our biggest one is homes. Homes electrified. Um, that is how we know that we're making an impact.

Molly Wood: Got it.

Paul Lambert: Um, so. I mean, there's lots of other metrics, obviously, but…

Molly Wood: No, right. But that’s what I’m asking, is the primary one, yep.

So, and then finally you alluded to, you know, obviously we all know, obviously we all know the landscape has changed a lot on the federal side. Um, how important have incentives and rebates been and how do you expect that landscape to go, to look, look going forward?

Paul Lambert: They're important but not required. And you know, they're a tailwind when they're there.

Um, you can kind of divide the market into cooling and heating. On the cooling side, it's purely an accelerant. There's really only one technology out there to cool your home, and that is an air conditioner. And there's like, you know, open your window and stuff like when, if you're in places where you really need cooling, you're buying an AC.

A heat pump is an AC, it's just, it's just an AC that works in two directions. There's no other thing to compete with. So like people are going to be buying heat pumps when they, because they just need to cool their house. And about 60% of America is primarily cooling, as in they, uh, they have more cooling days than they have heating days.

Um, the other 40% is primarily heating, and that's where you have the, the, the fuel versus electricity conversation. And so the price of those two fuels can impact it a lot also. Um, if electricity is very expensive compared to gas. It gets, it's harder to get people to obviously electrify their heating.

Um, so, uh, the, I'd say the biggest factors are actually that it's, you know, they call it spark spread, sort of how much, um, a additional are you paying for, um, energy in the form of electricity versus gas?

And then, um, and then upfront incentives too, 'cause like the, uh, the other biggest barrier is just like the upfront cost. Even if you're saving people money in the long run, um, you have to, you know put a bunch of cash down, up front. You gotta finance it somehow. And it's just, it's just a little bit complex.

So where those incentives really, I think, make the biggest impact is where they're lowering that upfront cost right away. And then some of the other policies, you know, can actually directly, uh, impact the spark spread. For example, if you have, say, a carbon tax on fuel and then you're subsidizing, uh, clean electricity that it shrinks that.

Um, so yeah, it's all, it's, it's, it's all helpful, but also there's never a world where people don't need heating, heating and cooling. It's like, it's like food. Like, like you, you, you know, you can't live in most of the planet without one of these systems. So, uh, the market's always gonna be there. It's just kind of like, how fast is it moving?

Molly Wood: Right. In fact, I actually, uh, it does seem that, um, AC in particular, AC in particular, unfortunately, is a huge growth market. Like that's, you know, there's, there's the question of when people install these systems, and a lot of times it's at replacement. But I can tell you that in the San Francisco Bay area, people are installing AC in places…

Paul Lambert: Oh yeah.

Molly Wood: That, that we've never had to have it before.

Paul Lambert: Most of the West Coast sales, so like San Francisco up through Seattle, that's what's driving it is people are buying homes. Also, AC is, this is a global trend. When people have disposable income, they spend it on cooling. If they're in a hot place, like it's one of the very first things people buy.

Molly Wood: Interesting.

Paul Lambert: So, you know, a place like India right now are just exploding in AC. Um, so yeah, it's both climate change, like the world's legitimately getting hotter. Seattle is hotter than it was 40 years ago. For sure.

Molly Wood: Yep.

Paul Lambert: But also, um, people are buying homes where people living in 'em in the seventies or maybe okay. Or, you know, they couldn't afford the AC and now, and now that's what they want as, as, uh, as soon as they have the income.

Uh, so both of those things are real. And, and I, and, and I do think that while we are very much a, you know, a climate mitigation, uh, strategy, we're trying to stop climate change, we're also resilience in a, in a, an adaptation strategy because you, you need cooling in a, in a hotter world.

Molly Wood: Is the Quilt system a little more expensive 'cause it looks so good? Like, you definitely, you made it sound like it's an iPhone category.

Paul Lambert: Yeah. Well, well, so I'll say on that the 60, I think 60% of Americans have an iPhone. So like, it's not a luxury product, it's a premium product, it's not a luxury product in the way that, like most luxury products, you know, small single percentage of people can afford it.

Um, we are a, on par with a higher end heat pump. So the, we're price competitive with other top of the line mini-splits, but we're not a whole jump above, and that is actually like, surprising to most people. So like when the Nest thermostat came out, it was five to 10x more expensive than the very next, most, you know, kind of expensive thermostat you'd get at Home Depot.

Um, or, you know, remember when the Teslas came out, like, you know, the Model S or sort of the Roadster before that, like very, very expensive cars. So, um, the fact that we're able to be within the range and we're just kind of at the higher end of the range, so, you know, tend to be Japanese brands, but those brands, you're getting a similar quote from them versus from Quilt.

And, uh, you know, I'd be lying if I said I wasn't biased, but you're gonna get a much, much better product experience with Quilt at the same price.

Molly Wood: Paul Lambert is the CEO of Quilt. Where can, uh, people find you or find an installer?

Paul Lambert: Uh, quilt.com, Q-U-I-L-T.com. Click find an installer and we will, uh, match you up and get you, get your system as soon as possible,

Molly Wood: I love it. Um, how did you get the domain quilt.com?

Paul Lambert: Paid for it.

Molly Wood: Yep, I figured. Is there a cool story there?

Paul Lambert: There is a, there is a little, there is a little bit.

Molly Wood: I’m imagining a whole bunch of grannies being like… son of a biscuit.

Paul Lambert: No, no, someone was sitting on it, unfortunately. But, you know, we had raised a couple hundred K and I wanted to spend half of it on a domain. People thought I was insane, so…

Molly Wood: No, you’re not.

Paul Lambert: I know definitely it's one of those things like, told you so, but, um, we have it on a payment plan. I'm still, I'm, so I bought on a five year payment plan and so we're still paying it 'cause the co company's only three and a half years old.

Molly Wood: Wow.

Paul Lambert: Uh, but yeah, in terms of, you know, I think actually we got a pretty good deal for it. A, a five, a five letter dot com is, is a real asset. Um, but it, uh, and certainly we've invested into it, so it's worth more now.

But, um, uh, yeah, that's, you know, I, I, I knew we were building a consumer brand. I have a lot of strong feelings about what a name should be for a company. It should be a noun. It should, uh, be something people can hear on a podcast and know how to spell. They should be able to see it on a billboard and be able to search for it. It should have meaning.

Quilts are things that literally keep you comfortable in your home. They're heirlooms. I inherited a quilt from my great grandma 'cause she wanted to pass on comfort to her own children. My, this company started 'cause I wanna make a better world for my children. So like, like it was just perfect. And so we needed to, we needed to own that domain.

Molly Wood: Man, I'm so glad I asked that question. Paul, thank you for your patience with the, with all the extra add-ons here. That was worth it.

Paul Lambert: Of course. It was a great time. Thank you. Thank you for having me on.

Molly Wood Voice-Over: That's it for this episode of Everybody in the Pool. Thank you so much for listening.

Next week, a field trip! I visit the folks at Copper, the sexiest electric stove, slash infrastructure, you ever will see.

In the meantime, email me your thoughts and suggestions to in at everybodyinthepool.com and find all the latest episodes and more at everybodyinthepool.com, the website. And if you want to become a subscriber and get an ad free version of the show, hit the link in the description in your podcast app of choice.

Together, we can get this done. See you next week.