In 2000, Yoav Lurie and Justin Segall met at a Duke University pre-orientation backpacking trip in the Pisgah National Forest and, within just a few minutes, found themselves talking about launching a company together. “It took us 10 years to do it,” Lurie says. But it was worth the wait. This year, Simple Energy, a Web platform that uses social game mechanics to motivate consumers to save energy, is on track for $5 million in revenue.

Ten years after graduation, the friends decided to start a company that addressed the “broken relationship  between people and their energy consumption,” says  Lurie. They started reading about behavioral science and “gamification.” What if, they pondered, saving energy could be turned into a Web-based game that people played with their friends, earning prizes for themselves and at the same time cutting their utility bills?

The two developed their idea at TechStars Boulder in the summer of 2011, and talked to 100 utilities within the first 30 days of the program. “We just wanted to verify the market -- that utilities were interested in paying for this,” says Lurie.

It turned out that they were. States require utilities, most of which are privately owned, to practice “demand-side management.” In other words, they must try to educate and incentivize consumers to be more energy efficient.

Simple Energy came up with a tool that helps utilities do just that. The company contracts with utilities (their biggest client is San Diego Gas and Electric) and taps their customer databases to encourage people to sign onto the Simple Energy Web platform and invite their Facebook friends to do the same. There, consumers compete with one another to save more energy by, say, adjusting their thermostats or turning lights off when no one is at home. Then the results are made public. “When you show people a leader board that shows them how they’re doing relative to their friends, their immediate reaction is ‘I’d like to do better,’” Lurie says.

In a summer 2011 pilot program, the average consumer saved 20% and top users saved 40-50% compared to the previous year. The utilities pay Simple Energy for the program, and give winning consumers gift cards or other prizes paid for by their community service budgets. This summer, over half a million consumers will compete to save energy and will also be playing to benefit 25 San Diego schools. 

With a series A round of capital in the works and negotiations with a major East Coast utility soon to be announced, Simple Energy’s founders believe they’ve found an effective solution to the problem they set out to solve. “We save a whole lot of money for consumers and we also save energy for the system,” says Lurie.