Building a Business on Shades and Energy with Smart PNW

Nick Boever:

James, thank you for coming on to the podcast today.

James Roddy:

Yeah, good to be here.

Nick Boever:

So before our audience, before we get started, why don’t you give a brief introduction about yourself and what you do?

James Roddy:

Gotcha. So yeah, no, my name is James Roddy. I started a company called Smart PNW, and if you’re not from the area that stands for Pacific Northwest. And we started off originally as an energy testing and auditing company. And then I stumbled into the world of custom window treatments as a solution for fixing energy holes in houses, which tends to be windows.

Nick Boever:

Yeah, I was thinking that when I first got introduced to you guys, I figured that was a very ingenious move to make. Being already in the energy auditing sphere, why not also provide these solution people are looking for when it comes to those energy audits? But I was curious what got you interested in the shading aspect rather than going into the home insulation and that-

James Roddy:

Yeah. Well, and it’s just, I identified a hole in the market. So I mean we preach up and down here, the number one cause of energy loss is air leakage. I mean, it’s a phrase I think everybody at my company hears every day because I mean we believe that, right? When we test a house, the first thing that we do is we set up a blower door test and we run around with a thermal camera and we determine where the high air leakage points are. Because even from an insulation standpoint, it doesn’t matter how good your blanket is, if there’s holes in it, you’re going to have hot or cold spots. And what we determine too, is one of the cheapest things to resolve is air leakage problems.

James Roddy:

But then the second thing that we identify as an issue would be insulation. And there’s plenty of great insulation companies out there that can do drill and fills and do attic insulation and crawl insulation and stuff like that. But the next point to identify now is these windows. And when you run around with a thermal camera, you can tell those windows are 20 to 30% hotter or colder than the indoor wall temperature right next to it. So what’s the solution for that? And that’s a good window treatment.

James Roddy:

And you haven’t asked the question yet, but the reason we actually use Hunter Douglas is because of their existing relationship with the AERC. That’s the Attachments Energy Rating Council. It’s a third party organization funded by the Department of Energy where Hunter Douglas actually sent a bunch of their different products to determine what the equivalent insulating value is at the window and how much solar heat gain they cut down on. And so we can actually scientifically present to our clients with Hunter Douglas window treatments, how much energy saving we can actually apply at their window depending on what product they select.

Nick Boever:

That’s really interesting and I’m glad you brought that up because I did want to get into, I call it the nerdy aspect of insulation. And that’s really just because it’s the hard data that I get so excited over. I sounded sarcastic when I said that, but I’m actually … it’s one of the things that I live for when it comes to building sciences and all that stuff. But I guess, so let’s go a little bit more into that insulation rating that you were just talking about because I’m pretty sure a lot of people, if we have integrators that are tuning in to listen or even designers, I’m not sure how knowledgeable they are in terms of the insulative properties of blinds.

James Roddy:

Right. So a lot of the homes, especially in our market here in the northwest where there’s a lot of great suburban areas and not a lot of dirt to build new houses, people are spending a lot of money to buy 30, 40, 50 year old houses. And so the equivalent insulation that you’ll find in these walls right now is about R8 to R11. And so with Hunter Douglas with AERC ratings, with their patented double honeycomb product, they’ve got R ratings as highest 7.8, which is the highest I’ve ever seen to put on a window. Right?

James Roddy:

If you have a standard faux wood blind or something, you might be able to get an R2 out of that. And then of course we all know that that glass as an insulator is a terrible insulator. I mean, you’re dealing with decimal point R-Values. So by being able to put a double honeycomb product on that window, like the Hunter Douglas duet line, then some of their products have anywhere from five, six to 7.8 equivalent R-Value. And I know I’m throwing a bunch of numbers out there because I geek out on this stuff, but having R8 on your window gets it almost as close to the R-Value you have in your wall right next to it at R11. And of course new construction, they’re packing R19 in there. But even still going from a .2 R-Value with just a glass to an R8, I mean, your window is significantly more efficient than it was before.

Nick Boever:

Oh yeah, that’s a big change. And I mean it is always important to talk about those numbers because I feel like in this situation when you’re talking about on a … you’re pitching this very tangible return on investment, so you want to be able to have the numbers to back that up in this situation, whether it be through, if you’re offering thermal comfort, the R-Value will definitely factor into that. Or if people do really want to keep track of their energy bills from month to month, that’s also going to be very important.

James Roddy:

Right. And one thing that we really harp on here, and I really wish everybody in the energy space would because the reality is I actually don’t sell energy savings from a cost standpoint. Right? So when we do an energy audit and we suggest trying to get your house more airtight and then adding some kind of insulation to your windows … and we do make insulation recommendations. If you have R19 in your attic, let’s make a plan for getting that to R49. It’s just not a service that we offer. But what we try to sell is comfort rather than necessarily energy savings. And when you’re more comfortable because you don’t have air leakage and you have good insulation at your windows, if you have good insulation in your attic and your crawl space as a consequence, you end up saving money on your energy bills.

Nick Boever:

Yeah, I feel like that’s really the best way to look at it, especially from the homeowner perspective when you’re looking at it. And again, especially in this day and age where a lot of homeowners are really … the sustainability aspect is definitely important to a lot of people from what I’ve seen. But that’s just icing on the cake when you lead it up front with hey, you’re going to feel more comfortable in these spaces.

James Roddy:

Yeah, absolutely. Even in my own home I have a test case where my dining room is all windows. I have all these wonderful day lighting windows across one side of the house. I have a skylight in there, I’ve got this big slider that leads out to my patio. And out here [inaudible 00:09:22] northwest the sun hits different. Our elevation’s a little bit higher and the sun just beats onto windows and magnifies, and that room in the summer was practically unlivable. I mean it’s just such a hot space and it doesn’t matter what you do from a ventilation standpoint or trying to force air, air conditioning standpoint, that room is still always hotter than everything else in the house.

James Roddy:

So I introduced a window treatment that has a 7.8 equivalent insulation value and during the hottest part of the day, we can start talking about automation next, I have those windows automated to close during the hottest part of the day and then they open up around sunset timeframe so we can enjoy all the nice day lighting there in the evening around dinner time. But the room actually stays significantly cooler than it had prior to introducing insulation on my windows.

Nick Boever:

I was actually going to get into the automation after that because it is really a dance that you have to play almost in these cases, especially when it comes down to you’re dealing with the individual behavioral patterns of the people that you’re selling to. Because I know one of the biggest trends, especially within the wellness sphere is it just all comes down to lighting in the home. And so obviously you want to be getting as much natural lighting coming into the house as possible. But then with that you also have to manage that solar heat gain that comes with all of this natural lighting coming in. So I’m curious to hear how you think that automation plays into that.

James Roddy:

Well, and another added benefit to the shading that I chose and my particular sunroom dining room is Hunter Douglas has a product called Duolite, which allows us to actually stack a sheer fabric with our regular fabric. And so in the summer, my concern isn’t so much about the glass itself heating up and radiating into the house, it’s actually trying to cut down on that solar heat gain. So those rays that you see shining on your floor or on your furniture, that actually is what’s radiating the heat into your home. If we hit that with a thermal camera, that’s where you actually see the percentage temperature gain and that’s creating the radiating effect in the room.

James Roddy:

So if we’re able to cut that down with a sheer product or a screen product, which again, Hunter Douglas Duolite just product plugging over here, we’re actually able to enjoy that day lighting if we’re having lunch in there during the day by bringing down that sheer product. And we’re still able to cool off the room by limiting the solar heat gain itself. And that’s another value of those AERC ratings is I can actually see what the solar heat gain cut is, depending on what product we put in there, whether we’re using a screen shade and white or black or if we’re using a Duolite type product, like the honeycombs that are sheer fabric.

Nick Boever:

That’s actually really good to know because one of the things that, at least from my perspective before I started really talking with you on these, my immediate mindset would be if I’m trying to avoid solar heat gain, I’m just thinking blackout curtains. And obviously that’s not what you really want to be doing when you’re trying to get that sunlight coming in, in the first place.

James Roddy:

Right. And so as an energy guy, I try really careful not to cross the line of who cares about how it looks as long as you’re accomplishing the purpose, right? I mean what I try to really do is think like a designer as much as I think an energy guy. So where can we mix both worlds? And again, this is why I love Hunter Douglas because I feel like they’ve really found a place where these two worlds collide. I mean, I’m never going to recommend that you put a blackout product in your living room or your beautiful, sunny dining room or anything like that. Blackout products are intended for the bedrooms and light filtering products are intended for the living spaces.

James Roddy:

And that really is where, to go back to your earlier question, if we could get into automation on these products where we can maximize, where you’re adding [inaudible 00:13:49] your window and at what time of day. And we can do all that through automation and programming, through Hunter Douglas’ power view, motorized products. Yeah. I’m a firm believer in introducing automation rather than doing it the old Minnesota style of we close our windows during the day, we open them at night. Or flip the season, we open our windows during the day and close them at night. And it’s just a routine that you do every day walking around the house. And that’s what we think about in the automation world is what are you doing every single day and how can we save you that 10 minutes a day by just making it happen?

Nick Boever:

Right, exactly. And I feel like it’s definitely … it almost makes sense that if you’re already in some of these houses, they’re already getting set up with these automated lighting systems in a way. It would almost make sense to be able to then put this on top of those lighting systems, because a lot of times, I know at the very least within luxury, high end integrations, you have a lot of circadian lighting being put in place and those are already being designed to operate based on the time of day and based on just sunlight levels at the time of day. So it would make sense to then you can just add on motorized window treatments as a back end to that.

James Roddy:

Yeah, and I feel that way too because I stumbled into the central lighting world after stumbling into the window treatment world, is that what’s the point in controlling all of the circadian rhythms with your indoor lighting if you’re still just letting the sun do what the sun wants to do? And so in my mind I think you start with window treatments and then you start thinking about the way you control your lighting.

Nick Boever:

I’m just very curious about, you had mentioned the Hunter Douglas honeycomb shading and I’m interested in how they’re able to achieve that level of insulation with that shading.

James Roddy:

So the secret’s been out for a long time about honeycomb type window treatment products. They create a natural insulating pocket, which is why I’m very careful when I use the phrase equivalent insulation value because obviously if you were to press those flat then you no longer have a true insulating value. But I mean the same thing could be said for bats of insulation. If it’s designed to be a five and a half inch thick bat to get R 19, if you press that flat, you no longer have R 19. And so it’s equivalent insulating value, but they have these insulating pockets on the inside of them.

James Roddy:

And then Hunter Douglas discovered and proved their theory using the AERC that by adding a second honeycomb layer within that honeycomb, it doesn’t create a true doubling of the equivalent insulation value, but it does actually increase how much insulation that window treatment is able to provide at your window. And what it is, it’s essentially just air pockets that are a different temperature than the temperature being radiated from the glass competing with the temperature that’s being controlled inside the room. And it essentially just slows it down. R in insulation is just extreme shorthand for resistance and so it’s thermal resistance.

Nick Boever:

Oh, okay. Okay. Interesting. Going back to what we were talking about a little bit, because you had mentioned about the design aspect when it comes to these shades. I’m very curious because there’s this constant conversation going on within the home technology sphere about this, I guess, merging of the two worlds almost where technology and design is coming together, not just in terms of the way technology is being designed, but in terms of integrators and designers are becoming a lot more collaborative on these projects. So I’m curious if when trying to pick these window treatments, obviously insulation is first and foremost, you want to make sure that’s in there. But do you have anybody in house that works as a design consultant for you guys to figure out what fits best in a room?

James Roddy:

Absolutely. And so when I say I try to think a designer, I’m so not a designer. I mean I can tell you, hey, let’s put automated window treatments on there. Hey, let’s use this one because it’s going to have this kind of insulating value. But then when you want me to help you pick what white, they all look white to me, but Hunter Douglas has 22 different versions of white. And so I will tell clients that I have an in-home design consultant and that’s code for my wife. And then I did actually hire a sales consultant that’s on our staff that she actually is more design minded. And so we’re actually able to collaborate internally within our team to do this. But the next step that my business has been taking, and we started this endeavor about six months ago, is we’ve been actually reaching out to designers and offering to collaborate with them.

Nick Boever:

Very interesting. I’m assuming that those collaborations are with designers in the Pacific Northwest region because that’s your area of operation, correct?

James Roddy:

Absolutely, yes.

Nick Boever:

Okay, cool. So we got away from it a little bit, but I do also want to cycle back to this one is talking about just conducting these energy audits in the first place, because say there’s an integrator in the audience that actually is like … they’re a little bit interested, they want to get into that stuff now. What does that entail and what’s the buy in for that? Is there going to be a lot of equipment needed?

James Roddy:

So when we started, I mean we do whole home energy auditing and whole home energy rating. And so we’ll show up to a house with $10,000 worth of equipment, but I don’t think that’s at all necessary for guys that want to make a measurable impact and be able to demonstrate to clients what a difference they can make. So when I say $10,000 worth of equipment, $9,000 worth of that is just to test the air leakage. That doesn’t tell me any story about what they need for their windows. FLIR is just a thermal camera brand, F-L-I-R. And what they offer is the ability to show to clients the temperature difference from their windows to their walls. Right? And so you can buy a little $400 attachment that attaches to your cell phone and you can actually use your cell phone camera to show the client that their window typically is 20 to 30% different and temperature than the wall next to it.

James Roddy:

If it’s 30 degrees outside and your house is set to 70 degrees and you look at the window through this $400 thermal camera that plugs right into your iPhone or Android phone, you can actually show them that their window is probably about 45 or 50 degrees while the wall right next to it is 70 degrees. It’s legitimate and it’s measurable. And then you can show them after you install those window treatments that now suddenly your window treatment is about 68 degrees right next to the 70 degree wall and you’re no longer radiating this cold into the house.

James Roddy:

And then if you don’t want to have something that hooks up to your phone, FLIR also has options for short range where you can walk around with a camera that’s got a trigger and you can take those pictures and show them to the clients in real time. We show up to all of our window treatment consultations with that on hand. Somebody paid for an energy audit, we offer our window treatment consultations for free. I think that’s pretty common in the industry. And then we just show up with the added value of the thermal camera and show them some of our observations with it.

Nick Boever:

Now with that being said, with the split, because I would assume that the way the business model would work would be like you come in, do an energy audit and then you make a sale off of that energy audit. Is that usually the case or is there a split between the two?

James Roddy:

There’s actually a split. So the way we’ve marketed ourselves is we offer energy audits as a package and then we offer window treatment consults. And that’s just where our design and our energy auditing have just collided and we just haven’t gotten away from where we started. And so when we do the energy audit, I mean our big push is still what’s best for the consumer. Number one cause of energy loss is air leakage. And so what can we do to address your air leakage? And then, hey, by the way, we also made this observation, would you like us to come back and present to you some window treatment options?

Nick Boever:

Okay. I’m curious though, as far as people coming to you in terms of they want window treatment, what is usually their complaint about it? Because in my head I’m picturing somebody might say that it’s like, Oh, I’m getting this horrible glare during the day that I want mitigated. What are the general complaints that people come to you with for wanting a window treatment?

James Roddy:

So I say this all the time, the sun hits differently here in the Pacific Northwest, and so we actually see a spike in our phone calls when the temperature first breaks 90 degrees. And anybody who’s in the south or southwest laughs at these numbers. It gets 85, 90 degrees outside and everybody panics because oh, my god, my house is so hot. And we still build new construction out here without air conditioning and so-

Nick Boever:

Jesus.

James Roddy:

Yeah. And so we get those phone calls a lot since temperature starts to creep up. And so yeah, we show up there with the thermal camera to show them, it’s like, yeah, your window is a problem. And we actually see on the inverse in the winter as well, where, as soon as the temperatures start dropping, people have cold spots in their houses. They’re like, I feel like my furnace is running all of the time and I’ve never heard anybody say that window treatments could be a solution.

Nick Boever:

That makes a whole lot of sense. It’s actually somewhat unrelated but also somewhat related. There was a study that I read a while back that was talking about just ways in which you can passively heat a house. And one of the things they suggested was they did studies surrounding skylights that when angled properly, they can do a pretty good job at heating a house without needing anything else. And the area that they tested that in was in the Pacific Northwest because of the way the sun is set up there.

James Roddy:

Yeah.

Nick Boever:

Yeah.

James Roddy:

Yeah, there’s a real reality to that and that’s where people have skylights and it is always going to be the hottest room in your house as soon as it breaks 85 degrees out here. It’s like, why is it so hot in this room? I’ve got air conditioning, but this room is always hot. And then of course skylights are another great opportunity for automation because you can’t reach your skylights. Nobody wants to dig out the crank handle and crank it from the ground. And so great opportunity to automate it so that we can keep those guys closed in the summer and open them up during the night so you can see your stars.

James Roddy:

And then of course, inverse that in the winter where you’re allowing in as much sunlight as possible while the sun is up and then close it at night to trap that heat now in the house with something that we can measure the insulating value on, so that all sunlight that you brought into the house to warm up that room isn’t able to escape as soon as the sun drops. And now that window is the coldest thing in your room.

Nick Boever:

Right. And I think it’s also safe to say that this isn’t something that is strictly relegated to the Pacific Northwest in terms of a need. Because I mean, I’m out on the east coast in Massachusetts. So I feel like we have pretty similar weather patterns compared to you guys just in terms of you got the really hot summers and you got the really brutal winters.

James Roddy:

Yeah, well, no, and my wife is from Minnesota and so we make a trip back there around Thanksgiving or Christmas every year and you watch the routine. And it’s just people in those kind of climates, they were raised this way. The sun is up, you open all your window treatments. As soon as the sun goes down, somebody gets up from the table and walks around and closes all the window treatments, and it’s just a natural trying to trap as much in the house as you can. And they’re doing it with old fashioned blinds that their grandparents used to use. And it’s just that we put in houses and those probably have an R-Value of about two. I mean, that’s what you get out of wood. And so by introducing different fabric options and stuff, we can significantly improve what’s happening at those windows.

Nick Boever:

Yeah. And even out in places we had mentioned, like Texas and all the southern, the southwestern states, it would basically be the inverse of that issue where having all the old school window treatments, trying to deal with the 100, 110 days that they can have out there sometimes. It’s got to be a strain on the AC units that they have. So even out there is basically what I’m trying to say, these types of window treatments would be probably very well received.

James Roddy:

Oh yeah, no, absolutely. And so I’m telling you, go ahead and get a thermal camera and shoot the windows in your own home and you’ll see it. Even when the temperature is temperate on a normal day, you’ll see the temperature difference from your windows to the walls right next to them.

Nick Boever:

Interesting. So I don’t want to hold you up too much longer, I just have one question left in my satchel. So really after talking about all of that, it was really great getting a chance to go really deep into just how much shading can really affect the insulation of a house. But I’m curious as to what are the next steps for Smart PNW? Where are you guys seeing your growth in? Because I know the last time we talked you were mentioning opportunities and getting in on the ground floor of newer constructions.

James Roddy:

Yeah. No, absolutely. So one of my big pushes to new construction builders is make those windows automation ready. It seems like such a low cost, affordable add-on for an electrician to do while he’s already in there doing his thing. And it’s one of those things where it’s just you got an extra tag byline to add to your marketing to sell to your clients and potential home buyers. Even if you’re building spec homes, if those windows are automation ready, then you tell the prospective homeowner, Hey, these windows are already automation ready. Most other builders aren’t offering that into the industry. So it’s really a big add-on and it sets up the homeowner to be able to not have to change batteries every year in their window treatments because their new construction home that they bought is ready to hook up and go with window treatments that we’re able to automate.

James Roddy:

And I really do believe that is the future in construction, especially where you’re noticing in markets like Canada, they’ve outlawed all cords on window treatments. You can’t have a cord over eight and a half inches in Canada and they’re pushing for those safety things in the US market to protect children and pets, and just dangling cords are a hazard in a home. And so automated window treatments, because they’re cordless, are the future here. So yes, absolutely, if you’re a new construction builder or you’re working with new construction builders, yeah, get those windows automation ready. It’s just the next step and I absolutely believe it’s the future in the way we’re doing windows.

Nick Boever:

Now, with your experience working with that, have you received … I mean, I have to imagine getting any amount of change going is you’re going to get a little bit of pushback. So how much pushback have you actually seen on trying to get these into new homes?

James Roddy:

Well, spec home builders typically aren’t ready to make the dive on it, but with custom home builders, guys that are building five, 10, 15 houses a year, or they’re already under contract with a client before they even break ground and submit permits on these, those guys are much more ready to have that kind of a conversation.

Nick Boever:

Okay, cool. Yeah, no, that’s very interesting. It’s definitely something that I’ve been a lot more interested in hearing about it just from that perspective. I was at a [inaudible 00:31:40] in IBS earlier this year, and that was pretty much the conversation that I was hearing across the board from all of the manufacturers there where they’ve been … There’s a big push now where it’s like for the longest times these smart solutions have been in the retrofit category and now a lot of people are trying to get these incorporated into the new builds. Obviously for monetary purposes, they want to be able to have their products included in these homes.

Nick Boever:

But even I feel from just being from a more consumer friendly standpoint, getting people introduced into smart homes in general, I feel like a lot of people are probably … the middle market homeowners are probably a lot more intimidated when they realize that they have to have all of this extra wiring added in. But to have that capability there from the start, more than likely going to make them more receptive to having this stuff brought in, especially now as we see that more and more homes are already just incorporating smart home products in general. I think the current statistic is that every single home has at least one or two smart home products in it at the moment.

James Roddy:

Yeah, and that absolutely sounds right and it’s just … I mean, people don’t even realize the type of smart home stuff that they’re implementing into their homes. And Amazon is practically giving away free echo devices with your Amazon Prime order, but it really is the direction that we’re going. I mean, smart home devices really are going to be in every American home. I mean, nobody leaves their home without a phone in their pocket anymore. It’s the way we’re headed as a society. And again, I believe it’s a safety thing too. I mean, nobody wants cords in their home for protecting children and animals and it makes a lot of sense to me.

Nick Boever:

Yeah, exactly. Well, it was great getting a chance to talk with you. Thank you again for coming on the podcast.

James Roddy:

Nick, thanks for having me on. I really appreciate the time.

Nick Boever:

Oh, absolutely. And hopefully maybe one day we’ll run into each other. I don’t know how, and I don’t know where, but I’m hoping for it.

James Roddy:

Yeah, absolutely. So yeah, I keep finding myself stumbling into more and more of these conferences. So maybe one of these day’s we’ll meet up.