James Tu of Energy Focus: “The concept of either sustainability or profit is no longer acceptable; The cost of not pursuing sustainability is escalating by the day”
…For decades, corporate profit and shareholder value trumped everything else for businesses, while sustainability had mostly been a cost to bear that resulted in a decrease of profit. As we face the increasingly urgent crisis from climate change, the concept of either sustainability or profit is no longer acceptable. The cost of not pursuing sustainability is escalating by the day. Businesses that engage in polluting our planet directly or indirectly will face boycott from both consumers and workforce talents, especially from millennials that are generally eco-conscious. Businesses have to embrace both sustainability and profit.
I had the pleasure of interviewing James Tu, Chairman & Chief Executive Officer of Energy Focus.
James is passionate about technologies that improve environmental, human and business performance. James is also the Founder and Chairman of Social Energy Partners LLC, which develops energy efficiency and sustainability projects with cutting edge technologies. He is also the Founder, Chief Executive Officer and Chief Investment Officer of 5 Elements Global Advisors, an investment advisory and management company focusing on investing in clean energy companies. Previously, he was the Director of Investment Management & Research for Gerstein Fisher & Associates and an Equity Analyst for Dolphin Asset Management. A winner of the 2016 “E&Y Entrepreneur of the Year” award, he received an MBA in Finance from Baruch College and a BS degree in Electrical Engineering from Tsinghua University.
Thank you so much for doing this with us! Can you tell us {a story about} what brought you to this specific career path?
I had been working on Wall Street as an analyst and investment manager for over 15 years and always felt passionate about sustainability. Fossil fuels, population growth, and rising living standards worldwide during the past several decades have made climate change an unprecedented challenge for humanity, and it was clear to me that we have to do something drastic to clean up our environment in time to avoid runaway temperature rise. In 2012, after seeing how the cleantech industry was almost decimated after the 2008 financial crisis, I decided to devote myself to the industry as a way to make my contribution to the sustainability movement while building a fulfilling career.
What is the mission of your company? What problems are you aiming to solve?
The mission of Energy Focus is to “enlighten and inspire for better living.” People spend 90% of their time indoors and buildings account for 40% of total energy-related carbon emissions globally. Improving building energy efficiency is one of the most impactful and immediate tools to reduce our reliance on fossil fuels because a watt of power saved is a watt of 100% clean energy produced.
We believe that with the advent of LED lighting — coupled with sensor, software, electronics and cloud technologies — we can dramatically reduce energy consumption for buildings while also improving human comfort and productivity. Lighting usually accounts for about 20% of a building’s total energy consumption. Advanced LED lighting systems today could save anywhere between 50–80% of lighting energy usage, compared with conventional lighting such as fluorescent and incandescent. In addition, with intelligent control technologies we can save significant energy on HVAC-related equipment as well. The bottom line is with technologies available today we can cut building energy usage by 50% or even more. Coupled with more economical onsite renewable and energy storage in the not-too-distant-future, we’re not far from enabling buildings to achieve “Net Zero,” or generating zero carbon emissions.
Despite these tremendous savings and sustainability potential, there is still a fear that new technologies could mess up building operations, as well as a resistance to learning technologies that might be perceived as complicated. This is why most likely the office building you’re at today is still not lit by LED, and there is no smart control on the lighting. It’s a human behavioral issue that could be resolved by human centric technologies, which are what we focus on developing.
Can you tell our readers about the initiatives that you or your company are taking to address climate change or sustainability? If you have examples that would help us better understand the initiative, please share them.
The rationale underlying our company’s mission is that we’d like to be an impactful change agent to address climate change and the sustainability challenges the world is facing now and for the foreseeable future. So, we strive to set the highest standards of LED lighting when it comes to sustainability.
Our LED lighting products have a lower lifetime carbon footprint than likely most, if not all, the other available LED lighting products because we focus on efficiency, quality and durability. We have a 10-year warranty on our main LED lighting products, backed by our industry-leading reliability record since 2007 when we shipped our first products to the U.S. Navy.
We also are dedicated to developing and advocating lamp-centric LED lighting systems as opposed to integrated fixtures. The problems of integrated fixtures are high cost, they require more materials to produce and are also inflexible to upgrade to more efficient and intelligent LED lighting technologies in the future. We recently published a white paper showing that integrated fixtures could generate seven to fifty times more waste and two to seven times more CO2 equivalent emissions in a 10-year period compared with lamp-based lighting systems.
Equally important, one of our priorities is to educate the industry and our customers about the importance of buying quality LED lamps and how that could deliver the most triple bottom line impact which includes financial, environmental and human return on investment. Due to the commoditization of LED lighting products and the retreats of the incumbent lighting companies such as GE, Philips and Osram that had dominated lighting over the past century, there is now a shocking lack of education about LED lighting and its impacts on sustainability and human health. The result is that the market is filled with low-quality LED lighting products that not only burn out quickly, but also harm human safety and health through unwanted flickering or strobing.
In addition, sustainability is our Research & Development team’s primary guideline when developing new products and improvements to existing features. For example, we plan to launch a very exciting, breakthrough lighting control technology in Q1 2020 that will enable existing buildings to retrofit their light switches and lamps, to start dimming and tuning the color of the lights, with very little additional cost. This would save additional energy and provide tremendous health benefits based on circadian rhythm that was not economically attainable by the existing control technologies. And since communications are done through the powerlines instead of wireless, there won’t be any cybersecurity risk which has become a growing concern especially for government and enterprise facilities. This is a classic example of human-centric technology that could resolve the behavioral bottleneck that prevents buildings from improving sustainability while providing better living spaces.
Last but not least, we hired our first “Sustainability Analyst” in 2019 who is in charge of continuously reviewing our products and corporate programs for optimal sustainability impacts, expanding our sustainability initiatives, and educating our community of employees, customers and suppliers about ways to improve sustainability.
Again, for us, sustainability is not one of many values or components of our mission; it is at the heart of our mission and culture.
How would you articulate how a business can become more profitable by being more sustainable and more environmentally conscious? Can you share a story or example?
This is a critical question and the answer could determine the future of humanity. For decades, corporate profit and shareholder value trumped everything else for businesses, while sustainability had mostly been a cost to bear that resulted in a decrease of profit. As we face the increasingly urgent crisis from climate change, the concept of either sustainability or profit is no longer acceptable. The cost of not pursuing sustainability is escalating by the day. Businesses that engage in polluting our planet directly or indirectly will face boycott from both consumers and workforce talents, especially from millennials that are generally eco-conscious. Businesses have to embrace both sustainability and profit.
In addition, sustainability efforts can often increase an organization’s climate resilience, and thereby improve corporate profitability by reducing costs from climate change. Bank of America recently released a report that stated, “ESG is the best measure we’ve found for signaling future risk.” They went on to say that, “90 percent of bankruptcies in the S&P 500 between 2005 and 2015 were of companies with poor Environmental and Social scores.”
On a daily basis, Energy Focus works closely with organizations striving to reduce their environmental impact and improve the quality of life for their employees through high quality lighting. For example, flickers have been shown to cause migraines, headaches, reading difficulties, and neurological disorders. So because of these considerations, installing our flicker-free LED lighting may increase the profitability of a business not only through reduced energy costs, but also potentially increased employee wellbeing and productivity.
The youth led climate strikes of September 2019 showed an impressive degree of activism and initiative by young people on behalf of climate change. This was great, and there is still plenty that needs to be done. In your opinion what are 5 things parents should do to inspire the next generation to become engaged in sustainability and the environmental movement? Please give a story or an example for each.
Before I answer this question, I think we need to recognize that — as you mentioned in the question — youth, in general, have a pretty decent grasp of the issues at hand. While we certainly need to continue advancing that education, we also need to shift some of that attention to spreading knowledge and awareness to our peers and colleagues. There are countless adults, including many parents, who either don’t have any idea what sustainability means or don’t actively pursue or support sustainability practices. Just like what Gandhi believed “We have to be the change we want to see.” We have to inspire ourselves to inspire the next generations. So, I think the first and foremost thing parents should do is to educate themselves to be sustainability minded.
Second, regardless of which political party the parents belong to, we can all take pride in engaging in environmentally conscious conversations, because climate change is endorsed by over 99% of climate scientists and is now beyond scientific doubt. Many people also think climate change is such a remote issue and feel pessimistic or almost powerless to it. If parents are not afraid of talking about it, our children will do the same.
Third, children learn the most from the examples their parents set. I believe parents must also walk the talk. For example, when a parent talks ad nauseum about sustainability or environmental efforts and then unthinkingly leaves the lights on or air conditioning running — or drives the biggest gas-powered SUV — those actions will negate the words that have been spoken. On the contrary, joining or supporting a local climate change or sustainability group speaks loudly to children that everyone’s action matters.
Fourth, leverage on the increasingly frequent media reporting surrounding climate change to explain the profound consequences of climate change and enhance and sharpen the awareness of it. Once children develop a more acute understanding and sense of urgency about climate change, they are naturally prone to take actions to improve sustainability, starting from an individual level. The fact that Greta Thunberg was named Time’s 2019 Person of the Year is a perfect example how children today could be empowered to make global influences through media.
The fifth thing parents can do is practice sustainability whenever and wherever possible. Habits are often created by small, incremental yet consistent efforts. Children today could start turning off lights while leaving a room, buying and donating used books and toys, eating a more plant-rich diet, or reducing food waste, etc. Each of these actions practiced repeatedly strengthens the understanding and habits of sustainability.
What are your “5 Things I Wish Someone Told Me Before I Started” and why?
First, being smart and passionate simply aren’t enough. You need many more smart and passionate people to get together to achieve something great. In a fast-moving industry like LED lighting, there is almost an infinite number of opportunities and equally endless challenges. The most important determining factors for success are acquiring and keeping talent while making sure teamwork is effective.
Second, sometimes slow and steady beats fast and furious. Between 2013 and 2015, our company grew sales by about 20 times and we expanded our staff and our facility by five times. Many problems surfaced but we could not deal with them effectively as we were so busy handling the rapid growth. In 2016 our sales fell significantly and we had to go through a period of traumatic restructuring. In hindsight, we could have grown a bit slower so we could have grown steadier and avoided the dramatic ups and downs along the way.
Third, culture trumps everything else such as technology, products or marketing. Great products might carry a company for a while but without a great culture the company can’t last and there won’t be more great products. We set a great mission, vision and core values back in 2013. But when we grew so fast we didn’t pay enough attention to keeping our culture intact and we ended up hiring people that weakened the culture.
Fourth, a company’s board of directors needs to truly understand and embrace the mission, vision and values it stands for. Often, the professional directors are not necessarily motivated to help build something unique and want an easy paycheck or prestige instead. In times of crises or severe challenges, they tend to make short-sighted or devastating decisions. I built my current board with people who have a strong passion and track record on sustainability and/or a deeper appreciation of entrepreneurship.
Fifth, being in an entrepreneurial environment like Energy Focus takes constant time and effort, and I would have communicated better to my family so we could have been more prepared for the hectic and almost around-the-clock schedule. I’m extremely grateful for their support, but it would have been great if I had communicated, strategized and planned with them better before I started. This would have made the lifestyle adjustment smoother and less intense.
None of us are able to achieve success without some help along the way. Is there a particular person who you are grateful towards who helped get you to where you are? Can you share a story about that?
I would not say that I have achieved so-called “success.” I never did stop trying to learn and improve, and hopefully make meaningful impacts, and I did get a lot of support and help from many people, starting with my parents, my wife and many other friends, partners and colleagues over the years.
As to my career in sustainability since 2012, I am particularly grateful for a dear friend and investor of mine, Gina Huang. Gina is a very successful entrepreneur of her own, having built a high-tech manufacturing company in Taiwan. She had been a staunch supporter since I first started devoting myself to the sustainability industry in 2012. When we bought into Energy Focus in 2012, it was struggling tremendously after years of R&D investment without much revenue and a ton of losses. We went through a painful restructuring phase, followed by extraordinary growth for a number of years. Then our sales fell in 2016 and I ended up leaving the company in 2017. When I came back to Energy Focus earlier this year to restructure it (again!), Gina once again invested along with me when very few people had faith in the turnaround as the company was losing a lot of money in a fairly commoditized market. She is one of the finest human beings I have ever met and she has a truly sincere intention to support entrepreneurs to make a better world. The wonderful experience working with her made me want to help other cleantech entrepreneurs whenever I can.
You are a person of great influence and doing some great things for the world! If you could inspire a movement that would bring the greatest amount of good to the greatest amount of people, what would that be? You never know what your idea can trigger. :-)
I’d love to see a movement where people start to seek joy and insight from within instead of from outside, be it material success or recognition. It sounds like a mundane cliché but it’s literally the biggest hidden secret to live a fulfilled life — and it’s free!
Meanwhile, the way people live today simply is not sustainable. We use so much energy, materials and resources but we are not happier than we were decades ago when we had much less. Study after study has shown that, after a certain income level, further wealth or material possessions alone can’t make us happier — and actually could destroy us collectively as we’re witnessing now with climate change. Despite concerted policy efforts across the world over the past thirty years, global emissions are not slowing down. In fact, they’re accelerating, making climate change an exponentially more difficult challenge to deal with.
Technology can solve many problems and we need to continue to leverage innovation to improve human wellbeing. But technology might not be enough to combat climate change in time and even a small probability of failing to stop climate change portends unprecedented human calamities. Fundamentally civilization must live sustainably and that is only possible with a much more spiritual, rather than material-centric, life.
Do you have a favorite life lesson quote? Can you tell us how that was relevant to you in your own life?
Yes. It’s kind of a long and probably not a well-known one. It’s by Leo Rosten, an American humorist and writer: “The purpose of life is not to be happy — but to matter, to be productive, to be useful, to have it make some difference that you lived at all.”
I learned about it when I was in high school and somehow it just never left me and had always been the North Star on how I made key decisions in my life. To me it doesn’t mean we don’t seek happiness. Of course we do. It just means real happiness is obtained not by direct pursuit of it, but a natural product from living a useful, honorable and compassionate life.
I jumped into cleantech precisely because I’d like to contribute to the solutions for an unprecedented human crisis. We also have a core value set at Energy Focus and it’s called “ATEFOI+K”, which stands for Accountability, Trust, Extraordinariness, Fun, Openness and Integrity. All these core values are practiced and acted on the foundation of K, which stands for Kindness. Without kindness or compassion, one does everything just to solely serve one’s own interest, and all other values could actually create a powerful but destructive force.
What is the best way for people to follow you on social media?
LinkedIn is the most updated: https://www.linkedin.com/in/jamestusep
Energy Focus can be found on Twitter and Facebook @energyfocusinc
This was so inspiring. Thank you so much for joining us!
