Industry News

Young Company Focus: Ignite

Ignite is a new kid on the block, but its impact on the network marketing and electricity industries has attracted attention. The company sells electricity in the deregulated Texas electricity market and is among several nonincumbent providers seeking customers for parent company, Stream Energy. Ignite's founders wisely incorporated network marketing into their sales model. They sent legions of enthusiastic salespeople to explain the new choice and give others the chance to make a living, as well. It has paid off for Ignite independent associates and the original visionaries.

The Spark

Founder and Managing Partner Chris Domhoff was involved with the corporate side of network marketing in the past and thought that Texas' electricity market, which was deregulated in 2002, would be an ideal environment for it. There are millions of electricity customers in Texas, making it the 11th largest electricity market in the world. When the Texas Legislature cleared the way for other companies to compete with the incumbent electricity providers, which had locks on geographic areas, some relatively small companies were quick to join in. They slowly began to tell residents they had a choice, but many Texans remained unaware. There was a factor they'd overlooked-the ability to spread the word personally.

Years before, Domhoff watched from the sidelines as the deregulated telecom environment gave new wealth to entrepreneurs in that industry. He knew the same could be true for electricity. While these ideas percolated in Domhoff's mind, Rob Snyder was also eyeing the electricity industry. He found out through research that he could switch electricity providers and wondered why no one had told him. He began pondering... could he build a viable company in the newly competitive field? How could he do a better job of letting customers know they had a choice? A mutual friend put Snyder in touch with Domhoff, who knew that network marketing would create the powerful one-two combination of choice and information. Thus, Stream Energy and Ignite, the network marketing arm of Stream, were born. "We had a good feeling we were onto something," Domhoff says.

The first thing the founders did was partner with experts in energy and network marketing and find executives and managers who knew one or both. From top to bottom everyone on the Ignite employee roster has years of solid experience in the industries. The call center in particular is populated by those who know the network marketing industry, and-unlike many companies' customer service arms-it's based in Texas, in the same building as the Ignite corporate offices. "Network marketing experience is hard to find and not something you can typically get from the average applicant," Domhoff says. "It's a skill-set that's hard to teach. So we drew from our industry experience to get the right people. It's nice to have a call center with as many years of network experience as we have."

Call center feedback is immediate. "This was a big deal for us," says Paul Thies, Director, Marketing and Communications. "We felt like we had to have customer and independent associate care right here, with us. We do a good job of being attentive and responding quickly. We've got this team here in the building, so if there's an issue, we find out right away and can solve it faster."

Adding the Sizzle

Once the corporate team was assembled and Ignite was ready to go, word spread quickly. There was one independent associate who had heard about Ignite, was working in another network marketing company and wanted a new opportunity. He served as a catalyst for bringing in budding, enthusiastic entrepreneurs. By Ignite's official March 2005 start, more than 800 people had heard enough through word of mouth to come to the launch party. "They saw the sizzle in electricity, and it was unique," Domhoff says. "Everyone wanted to be in on this ground-floor opportunity."

The Ignite team, though, held itself to high recruitment standards. "I did not want to cross-recruit from another network marketing company, because I've been in the industry long enough to know that's dishonorable," Domhoff says. "I was never going to go down that path and still haven't to this day. I thought this opportunity stands on its own legs and that people would come." They came to Ignite in droves through independent associates, as intended.

Sending the Brigade

Doug Witt, Director, Operations, helped prepare the Ignite field with solid tools and training. Witt has extensive experience in the network marketing industry as a salesperson, so he knew what was needed. "I wanted everything to be independent associate-friendly," he says. "My history is in the field, so I brought that field perspective, an IA-first philosophy that we always use as a filter on all decisions."

In general, selling electricity is easy, say the corporate execs. The Ignite tools give independent associates instructions about marketing, the Ignite structure and creating a business. Selling, however, is not terribly challenging-at least when you're selling electricity. Everyone uses it, they don't have to decide each month how much electricity to purchase, and it doesn't require samples. Not having to carry inventory is a huge bonus for independent associates, and the only real challenge to selling electricity is educating consumers about reliability. The explanation goes something like this: The wires, poles, all delivery systems and production abilities are still regulated and provided by the previous incumbent companies, often called "legacy providers." The billing, rates and customer care are provided by Stream Energy (Ignite's parent company). So, when a whole neighborhood's power goes out, Stream customers are in the same position as those with another provider. Once customers understand this, their reluctance is assuaged. Most are learning about Ignite and Stream from friends or family members and often can save on electricity bills by switching to Stream. "It's a no-brainer," Domhoff says, chuckling.

Once independent associates have gathered customers, they can be sure of their commissions, which are paid weekly. The Ignite commission structure is dollar-based, not percentage-based. So when an IA reaches specific levels, they know exactly how much the check will be-and can check it online through myriad reporting tools. "That's something I really hung my hat on," Domhoff says. "I believe that the network marketing industry is not changing enough in terms of residual income. Ours is dollar-based because I didn't want to see our IAs impacted by market conditions. Whether gas prices are high or low, whether it's summer or winter, whether your customer is in an apartment or a huge house, those things affect our market."

Fired Up

Ignite has been phenomenally successful in just under three years of operation. It started with no independent associates, no sales, six employees, and a 3,000-square-foot office. Today, the company has hundreds of thousands of customers and tens of thousands of independent associates. There are 225 corporate employees in approximately 70,000 square feet of a landmark Dallas building.

"We went from dead last in March 2005 and are now the No. 1 competitive retail provider, behind the big four incumbents," Domhoff says. "So we're actually the fifth-largest electrical provider in the state."

Ignite has made a difference in the lives of its earnest independent associates. It just crowned its first millionaire. While Ignite's customer market is Texas, its independent associates are from across the country. Texas is a sizeable market, just behind the entire nation of Great Britain in electricity use. As Witt points out, "We could work here for decades, but there's a big, wide, deregulated world out there." Just over 30 percent of Texas residents have switched away from the incumbent providers, still leaving a large opportunity available for Ignite associates.

This incredible rocket to success has attracted attention. In 2005, within eight months of beginning operations, Ignite was ranked in the top 150 Dallas-Fort Worth companies in revenue. By the time the rankings come out for 2006, they will most likely be in the top 100, with more than quadruple its previous year's revenue. D Magazine, Dallas' hometown, glossy publication that covers everything from business to society, featured Stream in a 2006 spread. It noted that Stream and Ignite have significant sales by drawing this comparison: "To put that in perspective, it took Wal-Mart 18 years to reach $1 billion in sales; eBay and Yahoo did it in seven; Google took six. Stream might do it in three."

Future Is Bright

With such impressive performance already under its belt, where does Ignite go from here? To other markets and other products, eventually. There are 16 states with deregulated electricity markets, and all are ripe with possibility for Ignite. Others are considering deregulation and watching places like Texas to see the results.

There are still millions of Texas residents who could potentially become Stream customers, giving the company heavier corporate coffers just by staying in its home market. Stream Energy is also licensed to sell natural gas, so that could be on the Ignite menu someday, as well. "There are so many things we can do," Domhoff says. "Our success thus far is just amazing, and we haven't even scratched the surface."

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