Acquiring Minds: "When to Buy a Large Consumer Business"

Host: Will Smith
Guest: Taylor Mattingly, co-CEO of Energy Ogre
Release Date: November 24, 2025

Overview

In this episode, Will Smith interviews Taylor Mattingly, co-CEO of Energy Ogre, a Texas-based consumer subscription business that helps households optimize their electricity costs in the state's complex deregulated market. Taylor shares the story of acquiring the company through a partnered traditional search, details of the business model, nuances of deal structure, regulatory issues, challenges and surprises post-acquisition, and the dynamic of co-leading the business with a long-time friend. The conversation offers rare insight into acquiring a large-scale consumer business—a path typically overlooked by most traditional searchers due to concerns about B2C revenue quality and customer churn.

Key Discussion Points & Insights

Founders’ Background & Search Journey

• Taylor’s Career Path:
  Taylor was in management consulting, became dissatisfied, and was drawn into the search fund world by his long-time friend, John Watson.

  "This was a very nice, calculated risk that I could go take in my career and I wanted to go do it with somebody that I inherently had, you know, 20 years worth of trust built." — Taylor Mattingly (05:08)

• Partnership Deep Roots:
  John and Taylor were friends from high school; their wives were college roommates—trust was central from the start.

  "The theme of family, relationship and trust for our story is going to be weaved throughout our entire conversation." — Taylor Mattingly (07:33)

• The Search Process:
  Fast and focused. They raised funds, launched in Feb 2024, found Energy Ogre under LOI in May, and closed by August.

  "We dropped everything and pursued this. From a metrics perspective, it was really the one that we wanted to go after." — Taylor Mattingly (07:59)

How the Deal Was Found and Won

• Personal Customer Experience:
  Taylor was both a long-time customer and knew a co-founder through family, giving him an inside track and trusted access.
• Relationship-Driven Negotiation:
  Trust with sellers was critical. The actual sale was catalyzed when a co-founder decided to move abroad, creating a natural transition point.
• Speed & Simplicity:
  The price and structure agreed on within a week. The deal “sold itself” due to the business's strength and personal relationships.
• Deal Structure:
  • 45% equity, 20% seller note, 35% conventional debt—more leverage than typical (~55%).

  "We could put a little bit more debt onto the deal. And because of that, I think our investors were very excited about the returns." — Taylor Mattingly (19:55)

Understanding Energy Ogre’s Business Model

• What is Energy Ogre?
  • $10/month subscription service.
  • Analyzes customers' electricity usage.
  • Finds the optimal retail electricity plan in Texas' deregulated market.
  • Acts as a concierge: switches plans when better options arise, acts as consumer advocate, and handles all provider interaction.

  "We're saving folks on average, average home, average rate within the state of Texas...about $500 a year." — Taylor Mattingly (15:02)

• High-Quality Revenue, Low CapEx:
  Hundreds of thousands of subscribers pay monthly. Subscription model brings highly predictable recurring cash flow.
• Consumer Advocacy/Neutrality:
  Unlike competitors who serve plans based on provider payouts, Energy Ogre only gets paid by the customer, ensuring alignment and trust.

  "We're very much taking this neutral posture...we're able to market as a fiduciary, as a consumer advocate, which has helped our trust factors, helped our NPS scores." — Taylor Mattingly (22:11)

• Churn & Customer Dynamics:
  Churn is higher than B2B, but once customers are past 90 days, churn is in single digits. Most attrition is due to customers moving out of deregulated markets.

Navigating Regulatory & Legal Hurdles

• Regulatory Complexity:
  As a broker, Energy Ogre is regulated by the Public Utilities Commission of Texas, mostly around representation and ethics.
• Investors’ Initial Skepticism:
  Taylor and John needed to educate investors on regulatory risks and show how Energy Ogre’s model mitigated typical B2C/regulated industry fears.

  “The risks associated with being regulated were probably a little overblown, I would say.” — Taylor Mattingly (31:46)

Post-Acquisition: Surprises, Transition, and Team

• Operational Surprises:
  Taylor was surprised by the back-end complexity and custom-built tech solutions necessary to fulfill the company’s promises.
• Transition Approach:
  • Leaned heavily on middle management.
  • Rolled out a 100-day “listening tour” to build trust, surface insights, and co-create strategic plans.
• Adoption of EOS:
  Now uses the EOS (Entrepreneurial Operating System) framework for aligning the vision (Taylor’s focus) and operations (John’s) quarterly.
• Key Role of In-House Texas-Based Team:
  • ~90 employees, majority in call center/customer support.
  • Emphasized the cultural and trust value of Texans helping Texans over cost-saving offshoring.

Strategic Focus, Churn, and Marketing

• Retention Over New Sales:
  Realized that improving retention (active customer education during cancel calls) had outsized impact and was under-resourced.
• CAC and Growth:
  Historically, growth fueled by “word of mouth.” Next phase involves higher customer acquisition cost (CAC), but still strong LTV/CAC economics.
• Market Size and Growth:
  • 5.3 million eligible meters (single-family homes) in Texas.
  • Energy Ogre is still at single-digit penetration.
  • Texas market is especially favorable due to high per-household spend and mandatory selection in deregulated system.

  "We believe that we can…double that. What we need to do is feed our word of mouth engine because we resonate really well in cross the table dinner conversations." — Taylor Mattingly (63:05)

Broader Market and Exit Potential

• Expansion to Other States:
  Possible, but risky due to less consumer awareness and different regulatory/shopper dynamics outside Texas—currently not a priority.
• Diversification to Other Services:
  Idea of expanding “switching concierge” service to insurance or other complex products, but not in motion yet.
• Defensibility and Regulatory 'Pen Stroke' Risk:
  Investors had to consider the risk of regulatory reversal but believe Texas is “too far down the path” for re-regulation to occur.
• Exit Scenarios:
  • Most likely: Private equity interested in recurring, sticky, consumer revenue.
  • Not a fit for strategic acquirers (e.g., providers themselves) due to customer switching propensity.

Partnership/Co-CEO Structure

• Balanced Skills and Domains:
  John focuses on Finance, IT, and operations (Integrator in EOS). Taylor handles marketing, external growth, and vision (Visionary in EOS).
  • Disagreements are resolved by “domain,” or with tiebreaking input from the experienced COO.

  "It's amazing to be able to trust the person on the other side of that conversation like I do with John." — Taylor Mattingly (51:12)

• Advice for Searchers:
  Pre-existing trust is ideal, but skill complementarities and clear division (visionary/integrator) are essential in any partnership.

Notable Quotes & Memorable Moments

• On the Value Proposition:

  "People are coming in for the savings. They’re typically staying for the convenience because we’re doing it for them. It’s a set it and forget it model." — Taylor Mattingly (15:45)

• On Churn and Revenue Quality:

  "The post-90-day churn is amazing in this business. It’s single digits. Most people leaving are just moving out." — Taylor Mattingly (27:07)

• On Being a Regulated B2C Business:

  "Compared to most of their portcos, a B2C business is a little bit off the beaten path." — Taylor Mattingly (26:07)

• On Partnership:

  "I think it’s a function of communication. I mean, I don’t mean to be cliché, but it’s really like explain everything, the good, bad and the ugly." — Taylor Mattingly (50:06)

• On Market Opportunity:

  "Single family homes in a competitive area within Texas: 5.3 million meters. We’re in single digits of that penetration story." — Taylor Mattingly (63:05)

Timestamps for Important Segments

• 03:38 – Taylor's background and path to search funds
• 07:59 – The fast, focused search process for a business to acquire
• 12:04 – How the relationship and timing led to a natural acquisition
• 15:45 – Energy Ogre explained: Texas’ unique electricity market and the consumer problem
• 19:21 – Size and scale of the business, business model economics
• 19:55 – Deal structure: equity, seller note, and conventional loan breakdown
• 22:11 – Why the flat-fee, customer-only-paid model works
• 27:07 – Churn explanation and reassurance to investors
• 31:46 – Learning about regulation and legal environment post-acquisition
• 33:44 – Operational and tech infrastructure surprises post-close
• 36:04 – 100-day listening tour: how the team was integrated and trust built
• 39:52 – Focusing on retention versus acquisition for recurring revenue businesses
• 43:15 – How the psychology of charging customers directly affects the business
• 48:59 – CO-CEO dynamic, partnership mechanisms for resolving disagreement
• 53:23 – 90 employees, with the bulk in local customer-facing roles
• 55:57 – Strategy on tech, AI, and operational improvements
• 57:56 – Why Texas’ electricity market is so fragmented, yet dominated by two major players
• 63:05 – Market size, penetration, and future growth plans
• 66:13 – Limitations of expanding to other states or geographies
• 69:19 – Texas's high average annual electricity spend and its drivers
• 71:38 – Pen stroke risk: possibility of regulatory change in Texas
• 73:42 – Who are likely acquirers; long-term hold scenarios and recapitalization pathways
• 79:01 – Final advice for searchers: maximize trust, in-person relationship-building

Themes and Takeaways

• Trust and Relationship-Building Drive Deals:
  Consistent theme from acquisition sourcing to internal leadership.
• Consumer Businesses Can Be Quality Targets:
  If you find recurring revenue, strong market need, and structural advantages.
• Understanding Nuance Yields Advantage:
  Knowing regulation, customer psychology, and market structure enables both the acquisition and growth of unique B2C companies.
• Retention Matters Most:
  A percentage point in churn has a massive impact on value in large, SaaS-like consumer businesses.
• Partnerships Work Best With Complementary Skills and Deep Trust:
  CO-CEOs succeed through defined roles and honest communication, especially if the foundation is aged and familial.

For more info and future episode summaries, visit acquiringminds.co.