Tomato Energy (Electric Only Supplier) - Too Good To Be True ?

masonic

MeteredOut said:

masonic said:

QrizB said:

Bendo said:

Seems somewhat extortionate considering the software was broken and never fixed.

That's something like £250-300 per customer, which does seem a lot when you consider that even for a well-run energy business the average annual profit per customer is much less than £100.

Makes you wonder if the money paid was for development costs that perhaps ought to have been spent by the parent company who now owns and is licencing it.

Software companies can and do work on models where they have a piece of software with certain features, and if a client wants additional features, that client can pay for them to be added to the product, but the software company keeps the IP for said feature.

If the software company and client have the same owners, this can be a good way of protecting income of the loss making client...

I wonder if that can legitimately be stretched to cover a whole product or platform. I think it was 2024 that MyWatts was launched (the year after the monies were paid by Tomato).

MeteredOut

masonic said:

MeteredOut said:

masonic said:

QrizB said:

Bendo said:

Seems somewhat extortionate considering the software was broken and never fixed.

That's something like £250-300 per customer, which does seem a lot when you consider that even for a well-run energy business the average annual profit per customer is much less than £100.

Makes you wonder if the money paid was for development costs that perhaps ought to have been spent by the parent company who now owns and is licencing it.

Software companies can and do work on models where they have a piece of software with certain features, and if a client wants additional features, that client can pay for them to be added to the product, but the software company keeps the IP for said feature.

If the software company and client have the same owners, this can be a good way of protecting income of the loss making client...

I wonder if that can legitimately be stretched to cover a whole product or platform. I think it was 2024 that MyWatts was launched (the year after the monies were paid by Tomato).

In which case, it could be that Tomato contracted the product development to Senapt, and their agreement had Senapt keeping the IP and Tomato getting a zero-cost licence to use the software for a "reduced" fee. eg. the headline product cost was £10M, but they got it for £5.7M.

But that's just conjecture.

Bendo

MeteredOut said:

masonic said:

MeteredOut said:

masonic said:

QrizB said:

Bendo said:

Seems somewhat extortionate considering the software was broken and never fixed.

That's something like £250-300 per customer, which does seem a lot when you consider that even for a well-run energy business the average annual profit per customer is much less than £100.

Makes you wonder if the money paid was for development costs that perhaps ought to have been spent by the parent company who now owns and is licencing it.

Software companies can and do work on models where they have a piece of software with certain features, and if a client wants additional features, that client can pay for them to be added to the product, but the software company keeps the IP for said feature.

If the software company and client have the same owners, this can be a good way of protecting income of the loss making client...

I wonder if that can legitimately be stretched to cover a whole product or platform. I think it was 2024 that MyWatts was launched (the year after the monies were paid by Tomato).

In which case, it could be that Tomato contracted the product development to Senapt, and their agreement had Senapt keeping the IP and Tomato getting a zero-cost licence to use the software for a "reduced" fee. eg. the headline product cost was £10M, but they got it for £5.7M.

But that's just conjecture.

The obvious idea was to build the software inhouse and resell it. Tomato, well Logicor, was acquired to give them a customer base to test out their adaptor and billing / crm systems. Once perfected, they would have hoped to licence to other suppliers.

Ultimately, their own stupidity and incompetence sank them as rather than stay small, they decided to offer some stupendous rates, onboard people onto TOU tariffs when they were unable to read meters and had little to no clue about their obligations as a supply licence holder.

Properly managed and with the right people at the top, things could have turned out very differently ,  but with that clown on Facebook,  it isn't hard to see exactly why they failed.

Newbie_John

Totally disagree, that's what innovation is - sometimes it doesn't work out:
Windows Phones
Google Glasses
Metaverse
Etc.

You don't try, you don't win. 

I'm pretty sure if they haven't onboarded people who they couldn't bill the story would be very different. Over the winter period they had thousands of people who haven't paid a penny and that led to more and more debts.. the rest of the story we all know.

masonic

There's a basic, established, process that they could have followed to prevent that. But they didn't. Because they were reckless. Same goes for trying to scale up without the necessary financial backing. I still maintain that would have bitten them if not for the more immediate wounds. They failed to take basic steps to protect themselves by billing people using meter readings and standard rates when smart readings could not be obtained. Another well precedented approach within the industry. Even for those of us whose meters they could read, they were unable to generate the required industry flows to switch us without generating totally spurious change of supply readings, which ended up costing them another £80 for each affected outgoing customer.

The activities that led to their downfall were not innovative or even novel. Many of us left equivalent or more advanced services to join Tomato purely for the loss-leading tariff. The part of their offering that did seem innovative has not really been tested yet.

MWT

MeteredOut said:

Probably unsurprising to many, but Senapt and Tomato Energy share common directors.

https://find-and-update.company-information.service.gov.uk/company/10508789/officers
https://find-and-update.company-information.service.gov.uk/company/09735768/officers

So even if Tomato go under, I'm sure the Senapt owners will have been well recompenses for their excellent record of software sales.

Unsurprising mostly because Senapt owns Tomato and other related entities and reports as a group undertaking.

After the year-end they purchased the remaining part of Northern Gas Heating Limited, so that is also 100% owned.

They also have a 49% stake in a UAE entity. 

Bendo

Newbie_John said:

Totally disagree, that's what innovation is - sometimes it doesn't work out:
Windows Phones
Google Glasses
Metaverse
Etc.

You don't try, you don't win. 

I'm pretty sure if they haven't onboarded people who they couldn't bill the story would be very different. Over the winter period they had thousands of people who haven't paid a penny and that led to more and more debts.. the rest of the story we all know.

You disagree,  but you seem to be agreeing. The failure was purely down to the incompetence of the people running the company.  If they hadn't insisted on offering the cheapest energy around, with no margin to cover anything but basic overheads and hadn't on boarded customers direct to a ToU tariff without ensuring their systems could read those meters, then they wouldn't be where they are.

It is a simple case of incompetence at the top . 

lohr500

@Bendo @masonic  

I totally agree with both of you.

In my opinion the way TE have gone about entering the domestic TOU tariff space borders on reckless irresponsibility. At times, I did wonder if Walter Mitty might be at the helm.

It was clear to some of us at a very early stage that all was not well in the greenhouse, self inflicted blight had set in and the greenhouse keepers were unable to stop the rot progressing. 

There may yet be a Monty Don or Alan Titchmarch in the wings with deep pockets and an appetite for risk, ready to help with a miraculous recovery at the eleventh hour, but I think it unlikely.

Even if the bugs in the software platform were ironed out, I'm not sure any other utility provider would want to adopt it given the history.  

MWT

The irony is that I actually like the approach they have taken with their software as integrating the adapter into the platform rather than depending on a 3rd party gives them more flexibility, but it comes at the cost of increased difficulty, and they never managed to get over that hurdle it seems.

Buying and renaming Tomato was a tactical move by a software vendor about to lose their only customer, sadly they didn't have the management mindset for running a business in a regulated industry hence where they find themselves today.

The NOI they have filed buys them 10 days grace, let's hope they use it wisely...

wrf12345

"That's something like £250-300 per customer, which does seem a lot when you consider that even for a well-run energy business the average annual profit per customer is much less than £100." That is the whole point, energy retail profit is capped at three percent, moving money to unregulated (by Ofgem) companies mean they can keep within the cap whilst making lots of profit - all the better if the core profit ends up in an offshore company (for them, anyway). The larger retail energy companies possibly have this down to a fine art form. You need clever accountants to do a forensic audit of some of the big companies but alas the good ones are already working for the energy companies.