How one startup is tapping into the $100 billion AC market

A great salesman, they say, can sell ice to an Eskimo. Perhaps so, but try selling ice skating in Israel, where it’s hot all the time and most people can’t skate.

Five guys from Israel -- brothers Dan, Tom and Mordecai Forkosh, with their father and their uncle -- tried to do just that. Back in the 1980s, they brought indoor ice-skating rinks to Israel after visiting a skating rink while on vacation in the U.S. It didn’t go as planned. In 1991, during the first Gulf War, a Scud missile destroyed the company’s first ice rink at a mall in Haifa. Eventually, the family built 22 ice rinks in Israel and Europe. But, along the way, they learned how to efficiently cool air in a humid climate to keep their energy costs down. The technology they developed became Advantix Systems, a “startup” that, under the right circumstances, can reduce the cost of air conditioning in commercial and industrial buildings by 30 to 50 percent.

This is a big deal, says Hannah Choi Granade, the U.S. president of Advantix, who left a prestigious consulting gig at a McKinsey & Co. to join the company, trading in her heels for the steel-toed boots that she now wears on customer visits.

“This is the un-sexiest company in clean tech,” she says. “We make air conditioners.” But air conditioning is a $100 billion global market, and it grew by 13 percent last year, despite the sluggish global economy. “The developing world wants air conditioning,” she says. “The rate of growth of air conditioning massively outpaces the growth of renewable energy.” And, of course, it matters to the environment whether AC is provided efficiently or not.

Advantix is in every respect a global company. It manufactures its equipment in a factory on an Israeli kibbutz, south of Haifa. It has an operations, sales and engineering center in Mumbai. It has a sales office in Shanghai. And its U.S. headquarters in Miami is led by Hannah Choi Granade, who is the daughter of immigrants from South Korea who grew up in Ohio and New Jersey.

I met with Hannah, who is 34, recently in Washington. She told me she discovered Advantix Systems after writing a 2009 report on energy efficiency for McKinsey that found “that the U.S. economy has the potential to reduce annual non-transportation energy consumption by roughly 23 percent by 2020, eliminating more than $1.2 trillion in waste -- well beyond the $520 billion upfront investment (not including program costs) that would be required.” In other words, the payback from investment in efficiency measures was about 2 to 1.

“If you’ve got all that net negative cost opportunity out there, that’s a market failure,” Hannah says. Of course, it’s also a big opportunity.

Image of speed skaters in an indoor ice rink provided by Corepics via Shutterstock.

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