Nerdalize: warming homes with nerd-heat

Nerdalize installs servers in people’s homes as radiators, and sells the computing power to companies and researchers. The computations executed on the server heat the home for free, (Nerdalize pays for the electricity used by the servers, home-owners pay for the radiator), and the computing power can be offered to clients up to 55% cheaper than current options available. Co-founder Florian Schneider tells me more about this innovative product and service.

Too good to be true

The home-owner gets heating power, the company gets computing power, both at a much better rate than possible in the current systems. This cycle sounds too good to be true, it did at least to the three founders of Nerdalize when they first started working out the numbers. The idea for Nerdalize originated thanks to a broken thermostat when two co-founders Boaz Leupe and Mathijs de Meijer considered heating their home with a hundred running laptops. After six months of playing with the idea of using this, I quote, “nerd-heat” to heat people’s homes, the three men could no longer think of a reason why it would not work. Co-founder Florian Schneider: “We locked ourselves up for a week to research costs of electricity and hardware, and countries we could launch in. Then we joined Startup Pirates, a pre-seed one week program, during which we calculated the business case. The numbers looked way too good, so we had them checked by others. They confirmed it. So instead of looking for jobs after our graduation, we started looking for investors.”

Expose your pitch

Nerdalize started with a crowdfunding campaign and, in addition, received seed investment. One of the jurors from the Startup Pirates program was their first angel investor, another was recruited from their personal network. Florian explains how the crowdfunding campaign helped them to build a strong story. “Because two of the founders had a more commercial than technical background, they spent a lot of time on our business case. Not on the paper document, but on how the whole concept would fit together. During our crowdfunding campaign we pitched to groups of family and friends several times a week: every single birthday party turned into a Nerdalize pitch. We figured out how people listen to the story of Nerdalize. The questions and doubts they had about the story, and how these differed from our own. I would advise any startup to expose your pitch to the people around you, you learn how to tell your story as a company and how to be convincing about your plans. This will help you in demonstrating to investors that your team knows what they’re working on and that you can tackle the issues that people are unsure about. There’s nothing more convincing than taking away doubt by providing an answer right away.”

YES!Delft

Soon after starting their company in September 2013, Nerdalize joined the YES!Delft incubator programme. Being a participant has three major advantages, according to Florian. “They select very critically. We had to present before a committee that included investors, entrepreneurs and bankers.” With their rigorous selection process YES!Delft ensures a high quality of participants –think of successful ‘graduates’ like Ampelmann, SenseIT, EternalSun – and, consequently, ensures high credibility for any YES!Delft participant. “One of the most valuable aspects of the programme to us is YES!Delft’s vast network that includes the major companies in the Netherlands. We are only a few steps away from the main decision-makers in companies that are interesting to us. Lastly, there is a strong sense of community within YES!Delft. There are over seventy-five companies all working on different things, but who all run into similar issues. You can ask around: ‘who had this problem and how did you solve it?’. The success of the incubator programme depends on what you as an entrepreneur make of it. There is this giant pool of help and information, but you need to know what it is that you need help on and where to get it.”

Pilot with Eneco

“When we got started at YES!Delft, we had a proof of principle device on the hardware side. With a high iteration speed we managed to quickly go to a proof of concept and closed a deal with Eneco. This deal meant we did a pilot with our radiators in five homes in the Netherlands, in the first quarter of this year. That was a majorly important step for us; to go from being an idea to a product that is physically in people’s homes. It proves that what we want to do is possible.” The press coverage Nerdalize has generated since joining forces with Eneco resulted in an upsurge of people signing up for the radiators “..almost to the extent that we cannot manage applications.” The challenge and focus now lies with “..getting more clients on board to make use of the computing power. And to develop all this side by side: the software, the hardware and the amount of clients we have. We keep working on our ‘cloud platform’ that brings together the servers as one computing resource, which then functions as a virtual datacentre that is available to customers. We spend a lot of time with the customer to find out what their individual need is.”

Finding talent to grow

With success comes growth, requiring an extension of the team. “It is super important that your core team unites a complete set of skills necessary to run your company. The core team members should have these skills, and in addition have the right attitude and network. Network is the first realm from which we recruit. For finding the right technical people it helps that we’re close to the Delft University of Technology. And we’ve had several interns at Nerdalize who we’ve hired afterwards.” One thing Florian regrets about the Netherlands is that it is made difficult to give out shares as compensation. “In America it is normal to attract extremely good people by offering them a percentage of your company. In the Netherlands that’s complicated because of the taxation on shares. But it enables you to hire talent at a competitive salary while relieving the pressure on your investment money. By making skilled people part owner in the company you motivate them and align your incentives.” Nerdalize’s motivation? “To create sustainable computing power as an affordable commodity while heating homes for free.”