From Semiconductors to Green Power: Borrego CEO Mike Hall (Part 3)

SM: How long were you able to take advantage of the beneficial AdWords pricing?

MH: Within four or five months people started realizing that Borrego Solar was advertising there so they figured they should, too. I only had a budget of $30 to $40 and it was great. It took the entire industry two years to get there and the cost was then $4-$5.

SM: Did you get good return on your $30 a month?

MH: It was huge. We went from maybe getting one call a day to getting 10. The return on that investment was just phenomenal. It has jaded me for the rest of my career.

SM: How was your conversion rate?

MH: The click through rate was higher than it is now. I think we got to the point where we were getting one deal a week. AdWords and referrals were our only source of projects.

SM: How big were the projects you were doing?

MH: There were smaller residential projects. A big one for us was $50,000.

SM: Getting one $10,000-$50,000 project a week is pretty good.

MH: It’s funny, but the most profitable that business has ever been was when we were in that garage starting. There was no cost structure, I was working for free, and our gross margins were 30% and we were still undercutting what little competition was out there. Business was incredibly profitable.

I was getting married up here and my wife did not want to move. I came up with a proposal to expand the business into Northern California. We were going to go in as a 50/50 partnership as a subsidiary and I brought in a third partner, Chris Anderson, who is now our CTO. We started working out of his house in Berkeley doing something similar.

Chris was an architectural engineer and had a lot of experience with construction. I did not have a lot of structural or electrical experience so he really added a lot. We ended up making the whole company better. By the end of 2003 we restructured the company. Chris took all the operations, I took all the sales and marketing, and Aaron took all the finances. We grew the company from there. In late 2008 it had 165 people and did $58 million top line last year.

SM: How did you finance and market your growth?

MH: We did not take any equity until late last year. We were profitable and bootstrapped it. Aaron negotiated some great deals with banks for commercial lines of credit to finance inventory. I wanted to raise money in 2007 and in retrospect we should have. When you start introducing oscillations, and competitors come in who are incredibly well financed, they can eat into your market share and create a bump in your growth curve. The equity cushion is valuable. The other thing we really could have used was the mentorship of venture capital. In the end we found some good mentors.

This segment is part 3 in the series : From Semiconductors to Green Power: Borrego CEO Mike Hall
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