The cost of renewable energy, particularly solar power, has dropped dramatically in the past two decades, to the point where 80 percent of new solar projects in 2019 are projected to outcompete even the cheapest oil, natural gas, and coal projects. The average cost of installing new solar panels in 2019 is just over $3 USD/watt, down from $12/watt 20 years before.
While the dramatic fall in solar prices in the 21st century is the result of a broad combination of factors, Lyndon Rive and the business he founded with his brother, Peter Rive, can take credit for aggressively driving consumer prices down as rapidly as possible. Through SolarCity, Rive brought solar technology into mainstream use, driving demand, and ultimately making it accessible to everyday consumers. In the process, Rive realised his entrepreneurial vision of making clean energy cheaper than fossil fuels for everyday consumers, while building a net worth of over $65 million in the process.
Early life and background
As the son of a business owner, and the cousin of famed billionaire entrepreneur Elon Musk, Rive comes from an entrepreneurial family. He started his career as an entrepreneur in South Africa at the age of 17, nearly dropping out of school to pursue his business if not for the lenience of his school principal. In the late 90s he moved to the United States to co-found a software company, Everdream, which was ultimately acquired by Dell.
Transforming the solar industry
In 2006, Lyndon and his brother, Peter, decided to launch SolarCity with the encouragement of their cousin, Elon Musk. Their premise was simple. Instead of selling costly solar infrastructure to environmentally conscious upper middle class or wealthy consumers, they would bring affordable solar energy directly to consumers. They did this by introducing the concept of solar leasing, where customers wouldn’t own the solar panels installed on their homes, but would instead purchase the energy produced by those panels at a lower rate than that offered by their conventional energy provider.
By selling energy instead of solar panels, SolarCity could eliminate large up-front costs for customers, and compete directly with traditional power companies. The result was dramatic. The massive demand generated by this approach over the following years allowed SolarCity and its suppliers to grow and benefit from economies of scale, which quickly drove costs down further.
Leveraging customers to drive sales
Over the years, customers repeatedly approached SolarCity asking for discounts for bulk installations, where multiple homes in the same neighborhood switched to solar at the same time. To further reduce prices, Rive built on this idea, offering increasingly significant discounts for larger groups of homes. This, in turn, only accelerated demand even more. Today, direct referrals are the single largest source of new customers for the company.
The resulting disruption to the US energy industry was so significant that, after heavy lobbying, 6 US states passed anti-solar laws designed to protect coal and oil companies, and issued thinly veiled fines and taxes on consumers who opted to use clean energy. Despite this, SolarCity has enjoyed massive success.
In 2016, Elon Musk’s Tesla acquired SolarCity, in an ongoing attempt to build a fully integrated clean energy infrastructure that unified clean energy production, better battery storage, and electrified transportation. Shortly after, early in 2017, Rive announced his departure from SolarCity, since the company was now well out of its startup phase, and he sees himself as an entrepreneur more than a CEO.
After keeping a low profile for a few years, Rive reemerged in 2019 as chairman of the board of directors of ZOLA Electric, a well-funded startup aiming to bring affordable off-grid electricity to millions of people in rural Tanzania and Rwanda. His goal is to help developing countries skip the traditional electric grid entirely, democratizing renewable energy globally.
What we can learn
The secret to Rive’s success as an entrepreneur is rooted in his passion and goal orientated approach. Rather than simply pursuing material success, his goal was first to bring solar power to the masses. His willingness to prioritise this was ultimately how he drove the price of solar energy down below that of coal. This, in turn, gave him access to the massive markets that allowed for the scale needed to justify those prices.
By adopting a specific goal beyond simply generating wealth, businesses can better drive the kind of disruptive, meaningful change needed to build a meaningful enterprise that gets the attention of both consumers and investors.