WaterSmart Seeks to Build Out Web-based Services to Conserve Water
[Corrected 6/8/11, 1:10 pm to show Peter Yolles is CEO, instead of Rob Steiner.] WaterSmart Software was founded two years ago in San Francisco, but co-founder Rob Steiner lives in San Diego. So when the cleantech software developer recently raised $900,000 in seed funding, I sat down with Steiner to discuss WaterSmart’s plans for developing software designed to help water districts and their customers conserve water.
Before starting the company, Steiner specialized in water deals as an investment consultant. Co-founder and CEO Peter Yolles, based in Marin, CA, was working as a water management consultant with water districts and other agencies. The two began to think about starting company focused on improving water use after they noticed a surge in cleantech startups focused on improving energy efficiencies, Steiner says.
Water has long been a critical resource throughout the semi-arid American West, and Steiner says the price of water is increasing about 1.5 times faster than the price of electricity.
(That doesn’t explain the whole story, however. Water economist David Zetland of Wageningen University in the Netherlands has argued that water pricing in California is drastically “underpriced” in ways that don’t reflect the scarcity and true cost of water production. Zetland also contends that water utility rates here tend to actually discourage conservation.)
In any event, U.S. residents use a tremendous amount of water every day—about 150 gallons a person, according to LeakBird, a San Francisco company that specializes in leak detection. In California, average daily water consumption varies widely. It is about 280 gallons per person in Sacramento and 97 gallons per person in the Bay Area. In San Diego, daily water use is currently at 143 gallons per capita (down from almost 180 gallons in 2007), according to the San Diego County Water Authority.
“We’re going to have to start managing water more efficiently,” says Steiner, who contends that the special tax districts, utilities, and agencies that provide water generally don’t use advanced analytics software, and cannot provide their customers with detailed information about their water use.
“They’ve done a great job of innovating in terms of encouraging the installation of low-flush toilets and low-flow showerheads,” Steiner says. “But I want to know: ‘How much water am I using? How does that compare over time? How does it compare with my neighbors? And how does that compare with a similar sized household in a similar house with a similar climate?’ “
Water Smart has been developing Web-based software that uses customer data drawn from its utility partners and provides websites where customers can log on to get information about their own water use and how it compares with others, as well as offering customized suggestions for ways each customer can specifically cut use. “We want people to realize that installing an ultra low-flow toilet does not mean sacrificing any quality of life,” Steiner says.
WaterSmart’s Web-based dashboard also tracks the cost of each household’s water use. The idea is to make it easier for consumers to save money, which makes it easier for utilities to reduce overall consumption and improve the efficiency of their system.
“We’re targeting about 2 percent in annual savings over one year, so roughly 10 percent in additional savings in water use over a five-year period,” Steiner says.
The company intends to generate revenue from its partnerships through a software-as-a-service business model, Steiner says. WaterSmart has been working to improve its technology through a couple of pilot programs in Orange and Sonoma Counties. The online service, once it’s ready for wide-scale usage, will be made available to homeowners for free.
“It’s at a proof of concept stage now,” he says. “We want to show that it works.”
The $900,000 in seed funding that WaterSmart raised last month will enable the company to recruit additional software developers and Web designers, and to start four more pilot programs with water utilities before the end of this year. The Menlo Incubator, co-founded by Match.com founder Gary Kremen, led the investment, which was joined by Draper Fisher Jurvetson, Physic Ventures, and Sand Hill Angels.
WaterSmart plans to initially target areas with big populations and low water availability, where their technology can make a big difference in saving costs and reducing use, Steiner says. So far, that means cities like Las Vegas, Denver, Phoenix, and regions such as Southern California and Texas. Altogether, Steiner estimates there are about 55,000 water districts and agencies nationwide, although most of those are relatively small water districts with less than 10,000 customers.
Nevertheless, the WaterSmart co-founder views it as a significantly bigger market, than the 3,300 electric utilities that dozens of energy-efficiency startups have been targeting. In comparison, Steiner says WaterSmart has relatively few competitors. While a handful of companies like IBM, Oracle, and SAP provide information technology to water districts, he says, “Where we see competition is where companies already sell smart water readers or mesh networks to utility customers.”
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