A Data-Centric Approach to Water Resource Management with WaterSmart Software’s Robin Gilthrope

August 12, 2015

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John Shegerian: Welcome to another edition of Green Is Good. This is the Wharton IGEL GE water innovation technology edition of Green Is Good here in beautiful downtown San Francisco. and we are so honored to have with us today Robin Gilthorpe. He is the CEO of WaterSmart Software, and you can find his great company at www.WaterSmart.com. Welcome to Green Is Good, Robin. Robin Gilthrope: Thank you. It’s great to be here. John Shegerian: Thank you. I had the pleasure and the opportunity of moderating a panel that you were on earlier today so I get a little bit of a head start on our audience, but I want to catch our audience up and I want you to share with our audience first, Robin, before we get talking about WaterSmart and before we get talking about this conference, I want you to share the Robin Gilthorpe story on how you even evolved to this point in your life – where you are the CEO of this very important innovative water technology company. Robin Gilthrope: Yeah, so my background. As you can hear, I’m not here from the Bay Area. I grew up in England. I’m a recovering economist. So that is to say, I studied both quantitative and behavioral economics and then I took that experience and really got serious about the business of data analytics and I applied that to lots of different industries from financial services to national security to retail and so on. But one thing kept kind of drawing me back, and perhaps it was an experience as an undergrad student working in the labs at Anglian Water where we were testing water quality. One of the things that people often don’t know about the U.K. is that actually there is less water per capita in the U.K. than there is in Morocco. John Shegerian: Oh my gosh. Robin Gilthrope: So it’s surprising, right? So as we sit here in California – and I’ve been living here for several years now – it’s very easy to think of our current water problems as a drought problem, but really it’s a growth and a population problem. John Shegerian: Explain what you mean by that. Robin Gilthrope: Well, by that, what I really mean is that it’s a supply and a demand issue. John Shegerian: Ah. OK. OK. Got you. When was your company born, and where was your epiphany to go from being an economist to someone who was going to step off the cliff – because that is what being a real entrepreneur is – and go take a germ of an idea, a vision that you have and raise money and go take a shot? Robin Gilthrope: Sure. So I mean for the foundation of the company, I am incredibly grateful to my partner, Peter Yolles. Peter had spent 20 years as a water guy. He started out in nonprofits, he worked for GE, he worked on the policy side and so on. So Peter is kind of the water guy and I was the data guy. John Shegerian: So was Peter back with you in England or here in the States? Robin Gilthrope: He is here in the States. John Shegerian: And how did you meet Peter along the way in the journey? Robin Gilthrope: It was through – he had a big investment community – Sandhill Road. John Shegerian: Got it. Robin Gilthrope: And that whole thing. John Shegerian: Got it. So you guys met and over coffee, dinner, over what did you decide that this was maybe a perfect match of water and data? Robin Gilthrope: So Peter actually got this started, and he did some very good initial work and did the incredibly hard thing or getting that first couple of customers. But what rapidly became obvious was that this was a much bigger market. I’ve spent my career looking at these analytics businesses and going not so much the zero to one but the one to 100 kind of experience. So what we saw was this opportunity really to go and target the 4 billion people in the world who are connected to city water. John Shegerian: Wow. So when was the company actually officially born, and where was it born, and how did you find the first dollars when you took an idea, went out to raise some money? How are you building it from one to 100 now? Robin Gilthrope: So the idea was born on Peter’s kitchen table in late 2009. John Shegerian: OK. Robin Gilthrope: There was a bunch of sort of bootstrapping and doing it in the evenings and all the rest of it for about a couple of years. John Shegerian: Right. Robin Gilthrope: And the journey was pretty interesting. By the years we got one utility, then five, then 12, last year 36, today we’re in the high 40s, hopefully hitting 50 utilities. John Shegerian: Does the success of you landing utilities beget success? As each success story ratchets up with the previous customers that you land every year when you try to track your growth kegger what is you growth trajectory right now for the next two or three years? Robin Gilthrope: So particularly in cloud-type business, there is kind of a playbook for this. If you talk to a bunch of the venture guys who have seen us 1,000 times, they’ll tell you what you need to do is “T2 D3.” So triple twice, double three times. That is kind of your path to a 100-million run rate. So interestingly last year we tripled the business. Actually the year before we tripled the business. This year we’ll probably more or less triple the business. Then the year after and the year after we’ll certainly be in that doubling rate. So we feel like we’re on the flight path that we need to be. John Shegerian: The playbook. Robin Gilthrope: Yeah. Absolutely. John Shegerian: Good. So share a little bit about what your company does though, the uniqueness of what you’re doing with water, data and the transparency you’re able to give on the demand side that didn’t exist before. Robin Gilthrope: At a very simple level…. John Shegerian: Yeah. Robin Gilthrope: What we do is we help utilities and consumers to save water, save money and avoid energy use. So we’re doing this with data, and we are really focused not on the physical world but on the digital world. John Shegerian: OK. Robin Gilthrope: And we’re focused not on the supply side but on the demand side. John Shegerian: Right. Robin Gilthrope: So what we do is we take data from the utilities that they need anyway to be able to give you a bill. John Shegerian: Right. Robin Gilthrope: We mix their data with our data. So we have data like “what does your house look like, how big is it, how big is your lot, what is the climate and weather, how many people are in the house, when was the house first built” and so on. So we have a whole series of parameters. We mix all that stuff together. We’re looking at this constantly, and we’re looking for patterns. We run through about a half a billion data points each and every hour, and we’re looking for anomalies. So what we can do is we can give information to the utility about who is using how much water when, where, why and how. That is very useful for them at a macro level all the way down to you as an individual. We then also forge a channel for the utility to talk to you. Typically, utilities don’t talk to their consumers so we change that dynamic and they can give you very precise personal information saying “you, John, use exactly this many gallons per day and this is where it’s going” and that in itself is actually helpful. Then we can actually give you a fair comparison and say, “Hey, if you’re using 100 gallons a day, is that a lot or a little? Let’s compare you with somebody whose house looks just like yours. They’ve also got four people in the house; they’re also living in a 2,700 square foot home on an 11,000 square foot lot and in this particular climate.” Because even in the Bay Area you look at somewhere like Berkley and somewhere like Orinda. The linear distance is very small but it’s a different climate. So if you live in Orinda comparing you with someone in Berkley isn’t fair. So we give people a fair comparison. Then we say, “Since you scored at the bottom of the class” – or wherever it may be – “here are three or five things you can do that are specifically tailored to your experience.” Every single consumer gets a different communication, and because we are doing this with digital techniques, we can do one-by-one communications at mass communications economics. John Shegerian: So wait a second now, Robin, I want to make this as simple as possible. Is this basically what you are doing with software and with technology and data in the water sector? You’re making everything measureable and therefore manageable? Robin Gilthrope: Yes. That’s a great way of putting it. And actually we’re using a lot of the techniques that conceptually people are familiar with from their everyday experiences on the Internet, right? John Shegerian: Right. Robin Gilthrope: I mean, the same way that Google can analyze what you’re doing and serve you with an ad that’s based on your exact profile. John Shegerian: Right. Robin Gilthrope: We do the same for water. John Shegerian: That’s brilliant. When you came up with this was anybody already doing it? Robin Gilthrope: So, at the time, people were starting to do this already in the energy sector. John Shegerian: Right. Robin Gilthrope: Nobody was doing it, and frankly, even it’s only now that people are starting to do it in the water sector. John Shegerian: In the water sector, for me to get my reading or to have that information in the community I live in in California, do I have to get that through my municipality or do I sign up through www.WaterSmart.com to get it directly from your company, which is then the big data holder of all this information? Robin Gilthrope: So the way that we work – currently, we work with and through the municipalities. So we view those utilities as our partners. John Shegerian: Got you. Robin Gilthrope: And our primary goal – frankly – is to make them look good and to help them rum better. So even if you are using our product, it will actually have not a “WaterSmart” brand on it. It will have your utility’s brand on it. John Shegerian: Do you sometimes co-brand or is it always private label? Robin Gilthrope: It’s always private label. If you look at the bottom of the page, you can probably find a little copyright and WaterSmart way at the bottom of the page, but we don’t need to be taking the limelight. John Shegerian: No kidding. That’s fascinating. And for our viewers and our listeners out there that want to learn more about Robin’s amazing company – and he is the CEO, Robin Gilthorpe of WaterSmart Software – please go to www.WaterSmart.com. The future. Before we get to talking about today’s conference talk a little bit about the future of WaterSmart. How big can this grow? Because we are talking about something if you’re comparing home versus home in a community and community versus community, now we start talking about city versus city, state versus state, country versus country, this sounds like a universally unlimited opportunity for your software and for your data analytics. Robin Gilthrope: I think that’s a great point. Firstly, it’s a huge market. There are 4 billion people in the world who are connected to city water. John Shegerian: Wow. Robin Gilthrope: And every one of them is a potential user of this technology. Then, I think the second thing that’s very important is as we get bigger we develop a whole series of network effects. The more data we have the more precise we can be so the information actually gets better and more valuable. The second point is that we’re also able to provide benchmarking. So utilities are interested in terms of how they grade. John Shegerian: Right. Robin Gilthrope: “Am I improving more than the neighboring utility? How do I score in the U.S.? How do I score in the world?” So, ultimately, we see an opportunity not just to let consumers see themselves against their fair comparators but to see utilities against their fair comparators, and it’s also – particularly in a crisis like we’re facing here in California right now – incredibly valuable as you can imagine for, say, the State of California rather than doing what they do today, waiting a month to get the two-month old data. Just yesterday or the day before we had all the data for April. This is a real-time world. John Shegerian: Real time. It’s brilliant. So the opportunity is truly unlimited. Your company is located here in the Bay Area? Robin Gilthrope: We’re right here in San Francisco, so it was a nice walk over here to Wharton. John Shegerian: Which is basically ground zero for innovation and technology. So here you are changing the world and making the world a better place right here out at Silicon Valley and San Francisco. So we are here at Wharton today. Why Wharton? GE? Why technology? And California right now? Obviously your solution is nothing short of brilliant, but why is it important for you to come and message not only what you’re doing but help frame up the issue and talk about how technology and innovation can help work our way through these issues? Robin Gilthrope: The reason to be here today was very much that we’re not just building a business. We’re trying to build a market, and we’re trying to encourage other people to participate. There are a couple of unique things about this situation. No. 1, when we sell to individual utilities, we learn from each of those experiences. And utilities don’t actually compete with each other. They are geographical monopolies. John Shegerian: Right. Robin Gilthrope: So unlike a lot of other markets – if I were working in financial services or retail – if I did something that was really cool for one company, they would definitely not want me to share that with another company. Actually, one nice thing about this industry is people want to share those best practices, and there is no conflict in doing that. The other thing is there is this ecosystem factor that – simply put – there needs to be more capital applied to solving these kinds of problems, and at the moment there just hasn’t been enough investment in this sector to really move the long-term picture, and I want to encourage people to be more aggressive about using big data on the demand side, on the supply side and using it in tandem with all the physical science that we have been hearing about today. John Shegerian: How big is your company in terms of employees right now? Robin Gilthrope: We are still relatively small. We’re a couple dozen employees. John Shegerian: Wow. Robin Gilthrope: But already serving millions of homes in almost 50 communities coast-to-coast. John Shegerian: And venture-backed. Robin Gilthrope: Absolutely. Yeah. Venture-backed by – among other people – Steve Westly who was the first marketing executive at eBay and famous early investor in Tesla. He is very committed to great returns but great outcomes for the community and for the planet. Also, other great names – DFJ, Physic Ventures and a series of large family offices, who are very much committed to our mission. John Shegerian: Robin, I want to give you the final thoughts and words. We have a whole generation of young people that want to be the next Robin Gilthrope, and that’s a great thing, and they listen to this show. This show is broadcast around the world. They now also get to watch it on YouTube when we go to these kinds of conferences and meet thought leaders and business leaders like you. Some food for thought as we wrap up for today. Where are we in this journey in terms of technology, water and the crises that exist and overcoming these crises with great an innovative and destructive brands like yours, and what advice can you give to the young people behind you that don’t want to just go and work at a law firm or an engineering firm, they want to be an ecopreneur like you that changes the world for the better? Robin Gilthrope: So the first thing I’d say is that unfortunately we’re going to see more of these crises. By 2023, we’re likely to see 40 of 50 states with a water crisis at some level. And that’s not my data that’s from the GAO from the U.S. Government. John Shegerian: OK. Robin Gilthrope: So this is not going away. The solutions – I think – will have to come from that innovation center and from venture-backed firms, and I really want to make sure that people are encouraged to do that. I think the other thing that’s worth pointing out is that when I look at our team, which comprises of behavioral scientists, economists, data scientists, designers and so on, everybody is there not just to make a paycheck but to make a difference. The opportunity that is presented by working in the digital world means that there is a whole series of areas whether it be water or other parts of our life where we can have a really material impact on the physical world even though we’re working with digital methods. And I encourage people to do that, and we are of course hiring. John Shegerian: You got that from Robin Gilthrope. He is hiring here at WaterSmart. And to learn more about Robin’s great company, please go to www.WaterSmart.com. Robin, I just want to thank you from everyone here at the conference and myself at Green Is Good for coming here today and making the world a better place. You are truly living proof that Green Is Good. Thank you so, so much. Robin Gilthrope: Fantastic. John Shegerian: Thank you very much.

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