Joe: Just going way back to what we talked about at the beginning, why do you think there was nobody doing this? Is baseboard heaters more of a Canadian thing? An east coast thing? I’m wondering if you guys understand why there was a gap there.
Josh: Yeah, that’s a great question. In Canada, I’ll start here in Newfoundland, it’s about three-quarters of the homes here in Newfoundland and Labrador have electric heating. So it’s super popular and it’s funny, as Zach was saying to somebody yesterday, I have never lived in a house that didn’t have baseboard heating.
Josh: It’s very, I guess, popular and known to us here. You look broader in nationwide, in Canada, that number drops down to only a third. One-third of homes in Canada have baseboard heating. And then when you look and combine the U.S. market and the Canada market — so now it’s in total, the two countries, it’s actually only one in 10 homes. So now we’re down to 10% versus the nearly three-quarters here in Newfoundland and Labrador. It is a smaller market than the traditional furnace-base thermostat market. And then, I think that’s why the focus of some of the bigger players that came before us, think of the Google Nest, Ecobee thermostats. They’re focused on the larger portion of the thermostat market and they’ve been expanding and building that out solution but also expanding into other smart home solutions.
And so you think about Nest, they have thermostats but they also have cameras and a whole host of other smart home products, and not necessarily focused on all the other types of thermostats that are out there. And so that’s really where we saw an opportunity was, there are lots of other thermostats out there. So, we built the baseboard thermostat which was our first product. The same thing happened with electric in-floor heating. There was no smart thermostats available for that type of category of thermostat, so we built a thermostat for that.
And now the same thing again with our air conditioning and mini-split heat pumps, Nest, Ecobee, they don’t work with those types. So we’re finding these types of thermostats that are not as popular but now, what we’re finding in aggregate, when we have all these different product lines, we are nearly if not bigger than the rest of the market. So it’s been an interesting journey and I think it got missed but I think luckily for us it did get missed.
Joe: Again, it’s wild, I guess. You look back on it to think that it was just a couple of brothers that saw the gap, moved on it, out of everybody on the planet. It’s uncanny, I guess, that you were the people to see it and to move on it.
Josh: Yeah. I totally — I mean again, I think it’s a little bit of our luck. I’m from here, from Newfoundland and Labrador, born here in St. John’s, but I lived in Halifax for 10 years. I did my engineering degree there. And I often think back to after graduation, if I had stayed in Nova Scotia, where baseboard heating is less popular; it’s probably on the order of only 20% of the homes there, or less. If I had stayed in Nova Scotia, I don’t think I would have seen this opportunity for smart thermostats for baseboard heating. But I certainly could have stayed there. It was just kind of happen chance that I moved back to Newfoundland where there happened to be baseboard heaters here very prevalent. So, A lot of it comes down to the right place at the right time.
Joe: I guess initially getting that initial traction and what was around that, I’d say, that regional trend around baseboard heaters. But now, I guess, for long term success — it sounds like what you’re saying is that there’ll be tertiary heating types and products that also is sort of coming together. These aggregates, you know, these markets are small on their own. But when you aggregate them, it’s creating now this sort of substantial market, I guess, for you guys to develop and to grow on. Is this it — is that correct?
Josh: Yeah, absolutely. And also just trying to pay attention to where the trends are going on new types of heating systems because that — the industry also doesn’t stay stagnant and so making sure that we’re paying close attention to what are the new types of systems and frankly, I know here in Newfoundland and in many places across Canada, mini-split heat pumps are one of, if not the most, popular and highest growth types of systems that are being installed. And so having a product for the highest growth opportunity in the HVAC space is one of the reasons why we chose to build a product for it and I know there will be more to come.