Stephen Lake, CEO of Jetson Home Inc., a heat pump installation business, poses for a photograph next to the work trucks at their office in North Vancouver, B.C, on Oct. 24. The idea for Jetson dates to Mr. Lake’s time as an adviser to the Creative Destruction Lab accelerator’s climate technology stream in Vancouver.Tijana Martin/The Globe and Mail
Stephen Lake was pegged for greatness early on. In 2011, the self-assured Scarborough, Ont., native was named one of the Next 36 – a group of entrepreneurial undergraduates selected by Next Canada for their potential to build big companies – while he was studying mechatronics engineering at the University of Waterloo. The wearable technology startup he and two classmates founded, Thalmic Labs (later renamed North Inc.) was Waterloo’s most hyped and heavily funded company after BlackBerry Ltd.
But North hit a funding crunch during the pandemic and sold to Google parent Alphabet Inc. in 2020 before its smart glasses reached commercial viability. Alphabet redirected North’s efforts to its augmented reality (A/R) unit and cut staff.
Four years on, smart eyewear is still a technology of the future, but it isn’t Mr. Lake’s future. The 34-year-old and North co-founders Aaron Grant and Matthew Bailey have regrouped to build something very different: A business that installs home heat pumps. Yes, heat pumps.
Their startup is called Jetson Home Inc., and as the name suggests, it is not a typical local heating, ventilation and air conditioning (HVAC) business. It’s a future-looking climate change play with ambitions to grow big by making heat pumps easier and cheaper to obtain.
“This is a dramatically different business from North – less deep tech R&D and way more operations – but just as rewarding to be working on something with the opportunity to make a big dent in climate change,” Mr. Lake posted on LinkedIn in September.
Heat pumps are considered a key technology for improving energy efficiency in buildings and transitioning to a low-carbon economy. An alternative to natural gas, oil and other less efficient electric heating options that is more cost effective over the long term, they work by compressing heat from outside air or ground sources and transferring it into a building. They also provide cooling in the summer by removing thermal energy to the exterior. The International Energy Agency, the West’s energy-security watchdog, estimates heat pumps could reduce global CO2 emissions by up to 500-million tonnes per year by 2050.
Governments at all levels are enticing homeowners to install heat pumps with rebates. But, said Kate Harland, mitigation research team lead with the Canadian Climate Institute, “they tend to cost more up front even if you save on your bills over the years.” That, she said, still acts as a barrier to adoption.
Mr. Lake’s goal is to shrink that “green premium.” He and his co-founders explored whether they could do that by making cheaper heat pumps, cutting installation costs or creating software to automate back-office tasks for service providers. “It became clear there was no clear one thing that would move the needle in a big enough way to make a dent on adoption,” Mr. Lake said in an interview. Instead, they decided “to solve all these problems at once.”
Jetson is building WiFi-connected electronics control boards for manufacturers to put in the pump units so they can be monitored after installation on a mobile app the company is creating.Tijana Martin/The Globe and Mail
Heat pump giants like Carrier or Trane typically outsource production and send machines to regional distributors who sell them to HVAC installers. Jetson aims to do most of that itself.
It is working directly with unidentified Asian outsourcers to procure pumps directly, cutting out middlemen. And it is collaborating with them to make pumps easier to install, by asking the manufacturers to add connected fittings between pipes that join the indoor and outdoor parts of the system so they can be snapped together, rather than welded. That reduces labour costs, fire risk and insurance needs.
Jetson is building WiFi-connected electronics control boards for manufacturers to put in the pump units so they can be monitored after installation on a mobile app the company is creating.
It is also launching an installation business, starting with three crews in Vancouver and Denver, Colo., where Jetson bought a service provider this year that had built software to calculate heat loads in customer homes. Jetson is creating software to automate back-office operations and save costs. For example, its online platform will enable Jetson to generate estimates remotely by getting customers to upload information and pictures of their buildings. The software will also automate applications for permits and rebates.
Meanwhile, Jetson has hired veteran installers and is developing a standardized process so crews can do jobs in one day. The idea, Mr. Lake said, is to charge well below the typical cost charged by other HVAC installers, which can run upwards of $20,000. Jetson’s rate for a detached Vancouver-area home is $12,000 plus GST, which could net out to a cost of under $2,000 to homeowners after rebates, depending on the jurisdiction.
The idea for Jetson dates to Mr. Lake’s time as an adviser to the Creative Destruction Lab accelerator’s climate technology stream in Vancouver, which he joined two years ago after moving west with his family. (Mr. Lake’s wife, Lauren Lake, another Next 36 alumnus, co-leads construction software company Bridgit Inc.)
North had been an early breakout star at CDL in Toronto, raising US$200-million from investors, including Intel, Amazon, Fidelity Investments and Salesforce.com Inc. founder Marc Benioff. Fellow CDL mentor Mike Winterfield, managing partner of Vancouver financier Active Impact Investments, was intrigued by Mr. Lake’s experience and encouraged him to turn his talents to climate change.
Mr. Lake, meanwhile, was growing frustrated with the slow pace at Alphabet, where he worked in its A/R division after the sale. In a company dominated by search and video, “all these other things including A/R were so far removed from the core that the organizational muscle to actually be effective and forced to ship things and work through hard problems wasn’t there.” He concluded Google lacked “the conviction and drive to ship a product that will be relevant in this space” and began thinking about cleantech opportunities.
He concluded many climate issues didn’t need “another 10 years of deep research and technical breakthroughs” but instead simply required overcoming obstacles that kept proven emissions-lowering technologies from wider deployment.
With his engineer’s mind, he worked backwards from solutions that could have the biggest impact on emissions, zeroing in on replacing gas furnaces. He and his North co-founders bandied around ideas, settling on their plan and incorporating Jetson in January.
The idea to build a vertically integrated heat pump business initially met with some puzzlement. “My immediate reaction was, ‘Uh, okay, it’s awesome you’re doing something in the climate space, but I really don’t like this idea,’” said Mr. Winterfield. He explained that his fund shies away from consumer-facing businesses, and that many venture capitalists dislike hardware and services plays. “Each one is hard to get right, and Jetson was doing all three.”
Chris Efstathiou Jr., a veteran supply chain executive who had worked at North and BlackBerry – as well as Amazon Robotics and Dell before that – said he expected the trio to develop another technology product for their next venture. He says when he learned they were doing “basically old school HVAC stuff, it made no sense to me.”
But the trio convinced these skeptics that if they got everything right Jetson could shake up an established sector and dramatically expand the market. Well-funded European companies were pursuing similar opportunities, including 1KOMMA5° GmbH, Octopus Energy Ltd. and Aira Group AB. Mr. Winterfield’s fund eventually invested US$2-million as part of a US$5-million seed financing by Jetson.
Others needed less convincing to invest. “Stephen is a unique and exceptional founder and extraordinarily determined,” said ex-North director and investor Dan Debow. “I wanted to back him, this is what he’s passionate about, it was a pretty easy ‘Yes.’” Mr. Efstathiou agreed to advise Jetson on its supply chain, while former North chief financial officer Mike Galbraith left a senior job at Damon Motorcycles to join the startup in March.
Jetson has now installed dozens of its product but faces many challenges to deliver on its lofty ambition to convert tens of millions of North American homes to heat pumps.
Recruiting experienced installers is trickier than hiring software developers, who are easily found on LinkedIn. HVAC installers are typically busy, fully employed and not necessarily engaged enough in the climate change mission to move. Recruiting involves parking trucks at local distributors and throwing barbecues, Mr. Lake said. Jetson will have to do that market by market as it starts expanding eastward in the coming months.
Another snag could come in the form of trade policy. U.S. President-Elect Donald Trump has pledged stiff tariffs on all imports, with Asia, and specifically China, being a prime target. Canada may follow suit as it has with electric vehicles. Mr. Trump’s election also raises questions about the future of green incentives that have driven some of the U.S. consumer interest in replacing HVAC systems that run on fossil fuels.
Jetson is also still figuring the best way to get the word out: Direct mail has worked so far, but most markets don’t lack for HVAC installers. The company hasn’t created warranty, service and financing offerings yet and will likely have to work to convince some homeowners to trust its Jetson-branded machines over established names.
Plans to generate recurring revenue lie ahead. “Several of those pieces will eventually be part of the puzzle; they are not today,” Mr. Lake said. “We still have a long way to go to prove this out.”
But after 10 years building their first startup, the trio have learned “what is noise and what is signal,” he said. “We’ve been much more focused and heads down on executing since we hit go.”