Navigating Growth and IPO Expectations | 4min snip from Cleaning Up: Leadership in an Age of Climate Change

Speaker 1
I mean, I can't
Speaker 2
resist at this point asking, well, you know, at some point, those investors will want their return, they'll want their exit. Are you going to do an IPO? And could you do that after an IPO? Do you think the public markets would allow you to behave, you know, to be the same Greg Jackson?
Speaker 1
It's really interesting. So first of all, on investors wanting a return, I mean, they are all long term. And that's been a really important part of our decision-making. And so far, the company valuation has grown at such a rate that they are sitting on very, very strong growth in the value of their stake. And we've got a large group. So what it means is at any moment in time, you've got Kraken that's got software multiples in its valuation. Strong growth. There's a rule in software, the rule of 40, I think. So it's margin plus growth
Speaker 2
has to equal 40 and then you basically have infinite money. Is that
Speaker 1
right? Exactly. Kraken's at 100 or something, right? So it may be higher. But I mean, the point being, incredibly valuable. Octopus Engine Retail in the UK, growing to the scale it has kind of fairly unique among growth businesses in regulated sectors. And then the innovations we're doing, like Octopus Energy Services, making our own heat pumps. There's loads of areas that in the long run will create value that we're able to invest in because of our more mature businesses. But for our shareholders, I think the world, there are now a number of very large privately held companies. You know, I think Stripe is one as an example. The famous
Speaker 2
one is always Mars. I believe Mars is private. Great. I was always at business school, which was, of course, 40
Speaker 1
years ago now. I think it still is. But I'm also looking at in sectors that are relatively new growth companies, people like Stripe. So, you know, there's no pressure on them, is it? Don't you feel like you'd like to let
Speaker 2
some of your customers who've been such incredible champions for you, wouldn't you like to sort of say, you know what, you can, we'll do an IPO, float 10%, 20%, and you can all benefit from this incredible success story.
Speaker 1
I wouldn't rule out an IPO, but it's definitely not a plan. And there may be other ways to enable customers to participate as well, so maybe more creative solutions. And just the only question, though, you know, when we launched Octopus, a lot of the time people would say to us, look, no one cares about their energy company. They just want the lights to come on and they don't want to think about it. And we were like, well, that's totally for people who don't want to think about it. But no one's ever really tried having a large pool of active customers who can get a bargain by using electricity differently. And never mind the people who automatically will get a bargain because, for example, we can automate the powering of a heat pump or charging an EV or whatever. So there were a lot of things that people hadn't tried and we were able to invest and do it at scale. There is a bit of it that we'd love to see if you could have a company that's gone public, but still to make long-term decisions. I'd be really interested to try that as an experiment, right? But anyway. I'm sure one could come up with examples, but it's certainly not the majority. Well, Jeff Bezos wrote a letter, didn't he? Two investors that said, if what you're looking for is short-term profits and dividends, don't invest in this stock. We're going to invest in long-term growth. And was able to deliver on that for a very long time. So, you know, I mean, decades. And so I do think it is possible, but it's not in our plans.

⁠The Kraken Wakes: Creating the Utility of the Future | Ep175: Greg Jackson

Cleaning Up: Leadership in an Age of Climate Change

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