High fliers

6 October 2006

Never underestimate the power of publicity. DIY Kyoto, an energy conservation start-up that lets you monitor your electricity usage at home, got its first funding thanks to an airline magazine article

DIY Kyoto was set up by three former students from the Royal College of Art, who hit on a product to help people calculate how much energy (and money) they burn at home. Monitoring electric current as it enters the house, the device, Wattson, transmits data to a sleek handheld display that details real-time power consumption.

The East London-based company was launched with a ₤35,000 grant from the National Endowment for Science, Technology and the Arts (NESTA), which is backed by National Lottery funds. One month ago, it received its first tranche of six-figure angel funding and it's now close to moving into initial manufacture. Jon Sawdon Smith, one of three founding directors and the electronics development expert, explains how Wattson went from college project to commercial concern.

Is it true that two of the founders had a similar idea for Wattson - but you didn't actually know each other?

Yes, I was at the Royal College of Art, and my final year project was to design a utility meter that measures power usage for every appliance in your house, using a special adaptor on each plug. The idea was that you could see what each appliance was costing at any given moment, and how much it costs you to run each year. But after college I moved to San Francisco, got a job and pretty much forgot about it.

Then at the end of 2002 I got an email from Richard Woods, who was on the same course at the Royal College and doing a similar project about the use of electricity in the home. He'd heard about my project and asked my advice. I told him not to bother! That inspired him to prove me wrong.

What was his angle on the idea?

He came at it with a different take - it wasn't aimed at individual appliances, but the whole house. The idea was that electricity would be monitored as it goes into the house, and the details would be transmitted to a battery-powered handheld unit which you can carry around with you. So it was the same end output as my project, but probably more realistic. Mine would have cost hundreds of pounds, whereas the mass market version of our product will be ₤120-150.

What we've developed is a simple sensor that you clip around the wire that connects to your electricity meter. That measures the current, converts it into a digital value and transmits it to the handheld receiver. You can read the data as a unit of energy or as the annual monetary cost, calculated according to your energy tariff. There's also a light source underneath Wattson that adjusts from blue to red depending on usage. We've designed the receiver to be something you'd want in your home because of what it looks like, not just what it does.

The information you get is great. One electric fan heater could cost you ₤3000 per year if you had it on non-stop. And it's not just the active use - appliances consume a lot of energy when they're on standby. I disconnected my microwave and my usage costs went down ₤50 per year - in other words, it was costing me 50 quid a year just to tell me the time.

We're also building an online community of Wattson owners and users, so you can compare usage to people around the country, analyse usage according to demographics and so on.

How did you get the first round of funding?

Richard initially teamed up with another founder, Greta Corke - who'd also been at the Royal College, although they hadn't known each other - and they started exhibiting the new device. One exhibition at the Science Museum really got us noticed because the PR campaign for the event was based on Wattson, and it got full page coverage in The Times. That gave us the confidence to go ahead and set up a company in 2004.

Richard had applied to NESTA the previous year but didn't get a grant. After he'd teamed up with Greta, they applied again around the whole concept of DIY Kyoto - it isn't just about a product, it's about empowering individuals to add to the Kyoto protocol without having to wait for governments or big business to act. Richard and Greta got through the first round, and I joined at that point. We went to Glasgow for a two week business school and got some great training on doing a business plan, making presentations and so on. Then we did a business plan for NESTA, and won a ₤35,000 grant.

That kept us going for a year, supported by some teaching and contract work. In the first half of this year, we started to put together another business plan to get investment. We were helped on that by a financial advisor at Business Link.

Where did you go to find the investors?

We actually found that people came to us. We raised a significant amount of investment - in the hundreds of thousands - from three people. Two of them were friends of friends, and the third - the biggest - read about us in an airline magazine. We've had some great PR, including The Guardian, Times, Observer magazine, ITN News, BBC Manchester, Vogue, lots of blogs. We got one or two articles, and then it snowballed.

The PR strategy clearly worked - but looking back, is there anything you'd have done differently?

There are a couple of things. I think the three of us have got complimentary skills, but we didn't necessarily use them as effectively as we could at the beginning. We all tried to do everything - we're now more focused on our own activities. We'll probably need a managing director in the future - we need to reconnect with what the business is really trying to do on regular occasions.

I think we could also have focused on getting the product out sooner. For months we went through a very long branding exercise - looking at who we are and what we represent - and that took time away from product design. But it's very easy to say that now - that's all hindsight.

And where do you go next?

We're now looking for one more medium-sized investor, and we're applying for match funding through the Small Firms Loan Guarantee scheme. The technology's all there, both the hardware and the software. It's now just about making it totally reliable. It's a big step from developing a prototype that works in a meeting room to something that you can guarantee will work for years. We'll manufacture 250 handmade limited edition products, and then we'll start mass manufacturing.

Jon Sawdon Smith was talking to Keith Rodgers of Webster Buchanan Research