How Behavioral Water Efficiency Can Change Our Relationship with H2O: an Interview w/ WaterSmart CEO Peter Yolles

WaterSmart Software recently raised nearly $5 million in Series A round of funding: we chat with Peter Yolles, Co-Founder and CEO, about the company, its growing team, the value of data-driven water management, and the future of the water system.    

Hi Peter… Can you walk us back to the beginning of WaterSmart Software?

Yes, I’d be glad to tell that story. I’ve been in the water sector for over 20 years, and so when I moved to my first home in 2001 it was very important to me that the home use water efficiently. So, I installed hardware like efficient toilets and other appliances, and at the same time I was very interested in knowing what impact these investments would have and how much money I was saving on my water use. Tracking these savings meant gathering data, which—I thought—meant going online to my local water utility’s website. Surprisingly, I found a page called “Water Consumption History”. Frustratingly, the page said “Under Construction / Check Back Soon”. And so I waited and waited and waited and, after 8 years, nothing changed. Looking back, it makes some sense because, when you think about it, water utilities just don’t have a core competency in building web services.

This meant that I had to build my own… in Excel. Every two months I’d look at my bill and enter the data by hand. Over time I was able to calculate what I’d saved, finding that I had reduced my consumption by over half since moving in! On a per-capita basis, I’d reduced it by about 75%. Put another way, my water consumption went from about 200,000 gallons a year to 100,000 gallons per year. As comparison, the five-person family that lived there before me had used 350,000 gallons a year. This was so rewarding, and gave me such positive feedback, that I was inspired to create a tool for everyone to track their water use, to compare that data to their neighbors, and to take it a step further and give personalized suggestions for what they could do to save more.

Can you give a little more detail on how your background fits into what WaterSmart is doing now?

Water has been the central theme in my career with a focus on sustainable water management. Just prior to WaterSmart, I was the Water Resources Director for the Nature Conservancy of California, and I also worked in water rights marketing and water project financing at GE Capital.

 

What do you like most about being CEO, and what’s the best part of what WaterSmart is doing as a company?

Personally, I am very driven by our mission of delivering sustainable water management. Living within our water supply means is a motivating, meaningful goal. From a team perspective, I am excited that we’ve gathered A-players who are committed to the mission, who bring incredible experience to the team. For example, our CTO Doug Flanzer is a world-class software engineer who has startup success in his background in addition to undergraduate and graduate degrees in hydrologic engineering. Combining expertise across different disciplines is the engine of our creativity… it’s definitely part of our special sauce and culture.

 

That’s great. Can you explain further what WaterSmart does, and how it does it?

We’re the best customer engagement and water efficiency platform for water utilities, nationally. We achieved this by creating the leading SaaS tool combining cloud-based computing, behavioral science, and data analytics. We’re the first to do this. The results that we’ve seen so far have been up to a 5% annual reduction in residential water consumption, a doubling of customer satisfaction, and a tripling of customer engagement. And these figures have been independently verified through studies at East Bay Municipal Utilities District and evaluations conducted by independent (and independently funded) consultants.

The ways we achieve such remarkable results are through three information channels:

1] Printed or emailed Home Water Reports, which are personalized communications for each individual household.

2] We’ve built an online Customer Portal that provides a highly functional and interactive experience where people can explore and learn about their water use, create a personalized water-savings plan, and track where all of the water goes inside their home. This is a unique component of our value—our model is able to disaggregate household consumption so that we can accurately estimate the volume of water going to outdoor use, kitchen use, bathroom use, etc. These estimations are based on analytics and a variety of inputs from property assessment records and a large dataset of existing users that provide profile details.

3] The Utility Dashboard is also key: this provides analytics, reporting, and CRM tools.

One way to think about what we’re doing is bringing new technology to an old industry. Another way to think about us is as a virtual reservoir helping water utilities better manage their resources while raising satisfaction levels and engaging customers.  

Peter, what are your plans for the recent Series A funds? Are there opportunities over the next 12 months that you’re particularly excited about?

We’re using those funds to build a national sales and marketing team and to invest in our engineering efforts and product development to expand the usability of our residential tools and improve the analytics and forecasting tools for utilities. Every water utility is concerned about customer engagement and managing their resources, so we’re expanding into all four corners of the map.

And the big opportunity for us right now is helping to address the ongoing drought afflicting 11 Western states. We’re helping cities and communities become more efficient and stretch their limited water supplies so that they continue providing a clean and reliable source of supply to their residences and business at an affordable cost.

California is in the third year of a historic drought where 2013 was the driest year in recorded history. The Colorado River basin covering 8 states is in the second decade of a 500-year drought, and our surface water and ground water supply levels are dwindling. States like Texas, which is not in the Colorado River Basin, is in its own decades long drought. Put another way, we have 3 over-lapping droughts occurring and it’s all exacerbated by Climate Change… the science of which tells us that dry areas will just get drier in the future.

Other factors are in play here, too. There’s population growth and an increase in fracking and resource extraction (all water intensive) in these water-stretched regions, driving the need for water management solutions. A lot of the conventional ways of conserving water, the low-hanging fruit so to speak, have already been picked. They’ve already been implemented. I am talking about things like high efficiency toilets and low-flow showerheads. So the question arises: once people have done that, what’s next? The answer is behavioral water efficiency.

 

You’ve painted a landscape with really serious water needs—it’s also clear there are real opportunities for WaterSmart to help. That said, what are some of the challenges to growth that your team faces today?

The biggest challenge to growth is that behavioral water efficiency is a new category in water conservation. Now that we have independently verified results, we want to let people know that we exist and that, most often, we’re more affordable than conventional conservation while delivering greater customer satisfaction.

Another challenge is the nature in our industry, which is quite fragmented. It’s not like we can go to the California Public Utilities Commission and the three major Investor Owned Utilities and be done. There are nearly 5,000 medium to large water utilities in the United States alone, so our communications efforts need to be expansive while recognizing the fact that water is very local.

Pivoting from challenges, what’s something awesome that your team has accomplished?

Honestly, one thing that I’m really proud of is how quickly WaterSmart can onboard a utility. I’m also proud of the pace of our sales cycle and deployment. We’ve had some utilities join us in under two months, from that first meeting to a signed agreement. In this industry with historical sales cycles of 18-36 months, that’s a tremendous improvement.

Many government agencies today want to see projects that are “Shovel Ready”. And in the water industry, there just aren’t many projects that are “Shovel Ready”… WaterSmart certainly is such a project. For an agency looking to do something this year, we’re likely the only thing that can be done in that timeframe, that is cost effective and “Shovel Ready”.

Thanks for taking this time, Peter. Was there anything we missed?

No, I think we’ve covered it quite well. I enjoyed chatting and thank you.

To learn more about the water market, request an invitation to our upcoming Water Innovation Summit 2014 and/or download our reports on innovation in the water sector. WaterSmart was also featured in our Smart Water webinar.