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Water PLUS – Keys to Building a Scalable Water Business

July 13, 2010

The first in a two part series, Guy Horowitz shares experience gained from TaKaDu’s recent successes scaling their water technology in partnership with Schneider. The second part will follow later this week.

For many years, water technology was a venture capitalist’s nightmare. What could be less enticing than capital-intensive, integration-heavy project-driven companies with long sales-cycles in the public utility space? Can you build a scalable water technology business without investing dozens or even hundreds of millions en route to scale?

Times are changing, and we are in the beginning of a new era. Quick-tongued investors have already nicknamed it ‘Cleantech 2.0’, though past attempts to use this term have been received with cynicism. Two-point-Oh or not, there is definitely a sense of inherent scalability baked into the next generation of cleantech startups, and water is not lagging behind.

How can one build a scalable business in a space characterized by one-offs? The answer has four pillars: Partners, Leverage, Usability and Software. Yes, to make things easy for investors, it also has a nice acronym. Forget about 2.0 – this is the Water PLUS.

Let’s examine these four elements one by one, starting from the most obvious.

Software: That’s a gimme. Software is an order of magnitude more scalable than hardware. Nothing to physically install, no holes to dig, no valves to be added or sensors to be hooked up – just install and start using. The enterprise software world has already experienced a mini-revolution dubbed SaaS – Software-as-a-Service. In layman’s words – software consumed from someone else’s servers, with nothing to deploy on a local machine.

SaaS adds an extra sense of scalability, since it addresses some of the hardest obstacles to quick, repeatable and scalable deployment: On one hand, getting past the IT department, and on the other, managing versions and upgrades. Reducing friction on the first deployment and then again on each and every update or upgrade to the system is crucial.

In recent years there have been several attempts to take a SaaS approach in water technology. Starting from the most basic SCADA systems, such as Tuppas or Multitrode, all the way down to smart sensors managed via a remote web-based service, as is the case of Derceto. When the idea behind TaKaDu was conceived, it was clear to its founder (and to its investors) that it could only be scalable if it had zero IT footprint.

Moving on. Let’s talk about Usability.

Usability and User-Experience are rarely mentioned when talking about water technology. Where there are large pipes and complex networks, operational and monitoring interfaces (and gear) are typically complex, take a long time to get the hang of, and separate the men from the boys. If you can figure out what’s going on and actually manage the water system – be it production, distribution or treatment – you have got to be either a veteran or a very unique individual. User-friendliness is not a common attribute of most water technologies. This is not scalable.

The up-and-coming generation of water solutions is all about user-friendliness. Easy to understand, easy to operate, easy to learn – these are keys to success. The underlying science can still be as complex as it needs to be, but what’s under the hood stays under the hood. Take, for example, i2o Water’s pressure management solution. It still involves smart pressure controllers being deployed into the water network, but the user interface is friendly enough for a newcomer to decipher and operate successfully. Needless to say, in TaKaDu we have been stressing usability from day one, and there’s always room for improvement. Our first customers have been great design partners.

True, usability is not only about friendly user interface. It’s about making your solution easy to adopt: Easy to deploy, easy to spread across the organization, easy to access, easy to learn and easy to use. Existing water technologies rarely qualify as ‘easy’ on any of these counts. Conversely, SaaS solutions have an inherent ‘ease’ – accessible via any web browser without having to install anything makes a SaaS solution an obvious upgrade.

On my next post I will discuss the two remaining pillars: Leverage and Partners. Until then, I’d appreciate additional examples of water technology companies that can break the scalability barrier.

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