How to Build a Smarter Water Cooler: The Bevi Story

Xconomy Boston — 

This startup has a little of everything. Software, hardware, Internet of Things. Consumer tech, enterprise sales, even environmental impact. All in a neat package that looks like a high-tech vending machine.

Boston-based Bevi (formerly called Refresh), makes an Internet-connected kiosk machine that dispenses customized drinks using tap water. On a touchscreen interface, you can select still or sparkling water, with a choice of flavors like orange mango, grapefruit, and pomegranate. The startup is testing other flavors, such as unsweetened lemon, and is working on adding things like vitamin C.

Co-founder and CEO Sean Grundy has a simple goal: “Get rid of bottled water,” he says.

First of all, I can attest that the product tastes good (I liked the unsweetened flavor best). On a recent visit, the Bevi machine at Greentown Labs in Somerville, MA, was in heavy use by residents of the co-working space. Grundy (pictured above) opened it up to show me its inner workings, but we kept being interrupted by people wanting to pour a drink.

Investors are betting that that kind of popularity will translate to office workers everywhere—and appeal to people’s desire for healthier and more sustainable options than sodas and plastic bottles.

Bevi raised a $1.5 million seed round earlier this summer, led by Tamarisc, a West Coast venture fund focused on energy efficiency and environmental startups. The company’s other investors include Rochester Angel Network and TechU Angels.

Outside experts see the startup as going after a viable market. “I think the in-office beverage space is going to be a big place for disruption of the next few years,” says Ben Einstein, managing director at Bolt, a hardware-focused venture fund and workspace that’s not involved with Bevi. “Manufacturing is tough for any first-time hardware team, but low-ish volume and working with commodity parts and processes takes much of the risk away.”

Grundy originally came at the business from the sustainability side of things. After studying philosophy at Princeton, he worked in data analysis at a DC-area conservation nonprofit. Then he went to MIT Sloan School of Management and got hooked on entrepreneurship.

He first met Bevi co-founder Eliza Becton in 2012 through a Sloan School friend. They met up at a Starbucks in Copley Square. Grundy was expecting a short meeting and planned to go work out afterwards. “I showed up with my gym bag,” he says, “but we ended up brainstorming for two and a half hours.”

Over the next few months, Grundy says, they concluded from market research and competitive analysis that “significantly upgrading the office water cooler was a big opportunity.” As his MBA graduation approached, Grundy says, he had to make a “decision to stop doing homework and work on the company.”

Becton previously worked at Vinely, a wine delivery startup out of Redstar Ventures. Grundy also pulled in Frank Lee, his best friend (and roommate) from Sloan, as a third co-founder.

The trio went through the Techstars Boston accelerator program in 2014, the last class managed by Katie Rae, with the company named Refresh. The bootcamp experience, Grundy says, taught them how to really work hard together and hold each other accountable.

At the beginning of this year, the startup changed its name to Bevi. “We wanted something shorter and more distinct,” Grundy says. (It seems pretty hard to name a startup these days—topic for another time.)

Bevi machine pouring a drink

Here’s how the technology works. You put your own cup under the nozzle and make your selection on the touchscreen. Each machine has a system of pumps and valves that takes tap water in from a hose and funnels it through a choice of flavor mixes and carbonation processes. The whole thing weighs on the order of 200 pounds.

But the software behind the scenes is actually more interesting: Using a console, Bevi tracks the status of each machine, how much concentrate of each flavor is left, overall quantity of beverages consumed, and patterns in all of the above. So the company can be smarter about what to offer at each customer site—organic options or unsweetened flavors, say. What’s more, the company tries to be proactive about inventory issues and maintenance.

“Customers don’t have to call us to refill,” Grundy says. “We take away the task of checking inventory.”

Bevi had its beta launch last September and has about 40 machines currently deployed, all within an hour of Boston. Until the team works out the initial kinks, Grundy says, “we don’t want to be putting engineers on planes.” So far, customers skew towards tech companies with 50-plus people: LoopPay (now part of Samsung), Veracode, Cytel, and Techstars, to name a few. MIT has four machines on campus; the school’s Venture Mentoring Service was Bevi’s first customer.

Grundy sees his main competition as water giants like Poland Spring and Polar Seltzer. “We want to get rid of plastic and the whole distribution system and create it all at the point of use,” he says.

Bevi touchscreen drink interface

Connected vending machines are not new, of course. Coca-Cola introduced its Freestyle machine back in 2009. But Grundy argues that such machines “tend to be very expensive and require ongoing maintenance, which makes them non-ideal for low-touch environments. We only need to visit an office every five weeks to handle restocking.”

Indeed, a lot of this will come down to price and ease of use. Bevi charges a flat monthly fee for its machine—between $250 and $450 a month, depending on the size of the office, Grundy says.

Bevi CEO and co-founder Sean Grundy

Bevi built its first 13 machines in Greentown Labs, the co-working space, but now has manufacturing partners in northern Vermont. The eight-person company just moved from Greentown to a space in South Boston this month.

Now, Grundy says, Bevi is focused on manufacturing, sales, and marketing—and on lowering its costs so it can ramp up operations. “It’s time to truly build the business,” he says. “The goal is to develop a model in Boston that we could apply elsewhere. When we expand, it won’t be one city at a time. I expect it to be Boston, and then a lot of places.”