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Ambit Energy began its seventh year of operation this past March by celebrating the completion of a goal we set at our launch in 2006; we passed $1 billion in annual revenue. Naturally, our rapid growth garnered the attention of our colleagues within the direct selling industry, but I think it surprised our competitors in the energy industry. Now, when I discuss Ambit’s success with my industry peers, what I find surprises them even more is how we did it.
It’s usually the first question I am asked at a conference or event: How did Ambit get to a billion dollars in sales in only seven years? I don’t think people actually expect me to tell them, but I do. And when I give them the list of the six decisions my co-founder and I made before we had a single customer, they often walk away with a puzzled look on their faces. Here they are:
Be the Finest, Most-Respected
During our first planning session in a conference room we were borrowing from his brother, my partner wrote our vision on the whiteboard: To be the finest, most-respected retail energy provider in America. After agreeing to make that our foremost objective, the next five decisions were easy.
Know Who You Are
My co-founder, Jere Thompson Jr., had finance and operations experience. Our CIO, John Burke, was an expert at building customer-care and billing systems. Sales and marketing were my expertise. All three of us had come from the telecommunications industry, and none of us had any experience in the energy industry—which turned out to be a good thing because the second decision we made was to be a data-processing company instead.
People scratch their heads when we tell them that, but it has made all the difference and is a key reason we have grown so rapidly. Consider the fact that we have no products. We sell electricity and natural gas, so we don’t need to store, manage or ship inventory from a warehouse. We utilize a direct sales model to attract customers, but all our orders are submitted online. So we live and breathe data.
We utilize a direct sales model to attract customers, but all our orders are submitted online. So we live and breathe data.
We decided to become experts at managing, transmitting, storing, sharing and crunching data. This dictated that we create an in-house IT team to build our own systems from scratch without relying on vendors to do the work for us. Keep in mind, this cost more and took longer than we had planned, while we continued to fall further and further behind our competition.
Today, our IT systems—we call them BlueNet because our CIO was faster at building them than our CMO was at naming them—are the envy of the energy industry and have their own patent. They have also allowed us to expand rapidly into new markets.
Knock Down Your Walls
The third decision we made focused on our corporate culture. We wanted an open, inviting atmosphere that encouraged accountability and fun. So before we had a single customer, we leased 22,000 square feet in a warehouse in the West End of downtown Dallas and tore down all the walls. In one corner, we set up six $19 foldout tables from Wal-Mart, which our executives—including me and Jere—still sit at today.
We didn’t lease elegant office furniture or create a corporate façade. We put our money into people, systems and commissions and let the empty warehouse scare off everyone who didn’t get the difference between surface and substance. The smart ones got it, and today we have over 650 exceptionally talented employees and an army of enthusiastic Independent Consultants moving us forward.
Define Your Targets and Align Your Incentives
The fourth decision we made keeps the entire organization focused on what matters most. The two most important metrics in our company have been, and continue to be, our daily average Consultant enrollments and customer enrollments.
Everything we do internally to reward employees ties back to one of these two numbers. Any project that requires a capital expenditure or human resources must first be measured by how it will impact new customer enrollments or Consultant enrollments. If it won’t then we don’t.
Every commission or bonus we pay externally to an Independent Consultant is earned for doing one of two things: enrolling a personal energy customer or helping a new Consultant they sponsor to do the same thing. No other activity generates compensation, and everyone in the downline is paid for the same thing.
Challenge Conventional Wisdom
The fifth decision we made as founders was to never be restricted by what other people said we should or should not do. At heart we are entrepreneurs, and we decided early on that we would test any idea to see if it had merit. Here are a few of the winners:
- People in the direct selling industry told us we couldn’t advertise our service directly to consumers because it would alienate our sales channel. We believed we could increase our Consultants’ effectiveness by creating name recognition through mass media. Our first test increased Consultant sales by 35 percent in the markets where we advertised.
- People in the energy industry told us we couldn’t guarantee our customers a savings and generate a profit. We rolled out our Guaranteed Savings plan in New York in 2007 and have been sending our annual savings letters to customers ever since.
- People also told us not to focus on trying to get referrals from our customers. It’s too complicated, they said. Today, over 10 percent of our sales come through one of our customers’ referral websites as part of our Free Energy program.
My point is a simple one: Trust your instincts and be willing to take a risk. Our business has grown faster as a result.
Never Sacrifice Integrity for Growth
Finally, the most important decision we made before we launched Ambit was to never sacrifice our integrity for growth. The thing that surprises people most is when I tell them we could have grown even faster than we have.
We could have looked the other way and allowed our field leaders to exaggerate their incomes in the early days when there was more belief than proof, but we didn’t.
We could have allowed commissions to flow faster by reducing the number of non-Consultant sales required to trigger them, but we wouldn’t.
We could have sat by silently when we identified Consultants who were taking shortcuts during the sales process when no one would have known otherwise, but we refused to.
A business built on gimmicks, shortcuts and exaggeration is not sustainable. The very growth those things create ultimately collapses the weak foundation it was built on.
We believe that the only way to succeed in business is to work hard, do the right thing and hold everyone to a high standard. It’s harder. It’s slower. But in the long run it’s more than worth it.