The Story Behind Zensi (The Startup Belkin Bought)

It’s every entrepreneur’s dream: build a company, raise no venture capital, and sell off the firm in less than two years. That was the path taken by tiny startup Zensi, which makes energy sensing and monitoring technology, when it was acquired by consumer electronics company Belkin this week. Kevin Ashton, former Zensi CEO and now the General Manager of Belkin’s Conserve line of energy efficient products, told us in an interview this week that the company received “a number of acquisition offers” after it started looking for funds, but that the company raised no outside funding before it was snapped up.

Of course no word on the acquisition price that Belkin paid for the team, which had five founding members, plus a number of consultants, and was based in Los Angeles. Ashton wouldn’t even give a range — making it about as easy to guess that it was a pretty low price as it was to determine that Buzz Aldrin would get kicked off Dancing With the Stars in the early rounds.

But getting bought by a company like Belkin in a company’s infancy — even if it wasn’t for a lot of money — has a definite upside. As our business-savvy readers know, if you don’t raise funding, you don’t have to give away a percentage — often around 30 percent — to venture capitalists. Belkin can also offer Zensi a large platform for mass production of its technology as well as its longtime expertise in developing slick consumer interfaces.

Secret Energy Sauce

So what exactly was Zensi’s secret sauce and why did Belkin (and others, supposedly) want its technology so bad? Ashton says that the technology, which was developed at the School of Interactive Computing at the Georgia Institute of Technology and the Computer Science & Engineering and Electrical Engineering department of the University of Washington, can pick up the different voltage noises that various home appliances emit through the electrical infrastructure. For example, different kinds of TVs, from plasma to LCD, use different voltage and produce a different voltage noise.

While any electrician knows how voltage noise works, says Ashton, the secret sauce is the smart algorithms that the team created. Those algorithms can process the voltage noise and determine what type of appliance created it and how much energy it is consuming. The technology takes advantage of signal processing technology, which Ashton points out is a little bit like facial recognition software in that it can figure out “who is who.”

Zensi’s original product was actually a system for generating an itemized electricity bill. Ashton says the company brought that product to an “advanced prototype stage” and had begun  talks with a variety of utilities for its service. But working with utilities and working with a consumer electronics company like Belkin are at different ends of the spectrum. When I asked Ashton what Belkin planned to do with its technology, given the differences in the market — Ashton said there’s several options: sell a service bundled with a smart meter, sell a product directly to customers (like Belkin does now), or use the technology to add features onto existing Belkin products. Asthon said he wouldn’t rule any of these options out, but the end goal is to help consumers view more of their energy usage.

In other words, the union is still in the research and development phase, and Ashton said that any type of product is more than a year away. Like most moves from consumer electronics companies eying energy management, this is a small step and could end up being more experimental than anything else.

But as Ashton put it to me: “Everybody is looking at this space right now. There is a lot of interest among larger companies about this emerging market.” There has been a lot of talk about broadband service providers moving into the market of selling energy management services to consumers (though I was expecting more attention in early 2010 than we’ve seen so far), including Verizon (s VZ), and Comcast (see Broadband Service Providers Are About to Ride the Home Energy Wave on GigaOM Pro, subscription required). Recently startups have been developing applications for the iPad that can control home energy consumption (see How the iPad Could Disrupt the Home Energy Management Market), hoping the iPad could be next breakout home energy device.

Image courtesy of mark sebastian’s photostream.