[Transcript] Watertech Webinar

WatertechRoger Royse:

Good morning. Welcome to our webinar today at water tech. This is Roger Royse. I’m the founder of the Royse Law Firm. This is part of our technology webinar series, and today we’re going to talk about water tech. If you’ve been with us this spring, you’ve heard us talk about FinTech, artificial intelligence, robotics, AR, VR, and numerous other topics. Today is the last of our technology series this spring. We’ll pick it back up again late summer, early fall, and we’re ending with a bang on a very big topic of water tech. Water tech is a major area of focus for startups in certain regions, and it’s gaining significant traction here in Silicon Valley. We have an expert panel gathered together here to talk about cutting-edge water technology.

I want to remind everybody that this webinar is being recorded, so if you’d like to see the materials or play it back or listen to it at another time, you’ll find it posted by the end of the day on Royse University’s webinar page. It will also be on the Royse Law YouTube site, and the audio will be available for download as a podcast in the iTunes Store. With that, we have four speakers today from a wide variety of backgrounds to talk about various aspects of water technology. Briefly, I will let you know who they are and I will let them take it away in our usual fashion.

Manu Pillai is the founder of WaterBit. It’s a sensing system for precision agriculture. It’s right here in Silicon Valley. Manu will tell you more about it, but they’re basically making a high granularity 40 metrics for precision agriculture, getting significant traction here in the Valley and a lot of buzzes.

Steve Jordan is the president and CEO of Packet Systems Corporation, again, here in the San Francisco Bay Area. Steve has 30 years experience developing new products and growing new businesses. He’s been in operating roles not only a Paquet, but also at Fairchild Semiconductor, several other organizations, and has been a strategy consultant with McKinsey & Company.

David Rummler is a strategic advisor in Clean Technology Disruptive business modeling. He’s currently doing strategy development with Clean Tech Strategy. He’s associated with the Clean Tech Open, which I’m sure you are all familiar with, and again, located here in the Bay Area and will be talking about some of the strategic initiatives around water tech.

Whitney Muse, sector manager of agriculture at Village Capital. She’s previously been with Chess Ag, Capital Partners, and some other agricultural related organizations.

With that what we will do is our presenters will go ahead and give a little description of who they are and how they come to the area. If you have questions, you’ll notice on the right-hand side of your screen there is our dialogue box. It says questions. Go ahead and type your question in. We’ll gather those and save those for the Q&A portion of our presentations today. Hopefully we have a large audience today, so hopefully, we’ll get to as many questions as we can. If not, I will forward those on to the speakers, and they can follow up directly. With that Manu, could you tell us a little bit about who you are and a little bit about WaterBit?

Manu Pillai:

Sure. Thanks, Roger. I really appreciate the opportunity and also the interest from the amazing audience, that’s the audience count that I see up there. A little bit about me. I grew up in the Bush in the northwest of Nigeria in what is called the Sahel part of the climate zone, pretty dry and with the monsoon, monsoon season and a very kind of a sandy, rocky type of soil type as well.

Ended up going and bumming around ended up in Silicon Valley, built all the usual stuff, servers, cameras, affordable systems, network systems, high-performance gear and the usual things. Then some time ago a friend of mine sent me a check and said, “Go solve a problem worth solving,” and that really stumped me. I went back, and I said, “What is it that really is a seminal thing to go solve,” and we went back and forth on that. Obviously, my friend is now one of our investors in the company, and we’d narrowed down on water.

Water is a very interesting thing. We have a limited supply of this on the planet. We have an increasing population. We have decreasing groundwater supplies, and we have a minimum and increasingly small amount of available high-quality, usable water. That really got us started in that. Within the application areas or the use areas of water, there is the environmental thing, which is pretty much making sure you flush the rivers down, so they don’t over contaminate and keep the salt out of the deltas. This is a global issue, whether you’re in Vietnam or India or in the Sacramento area. Then it’s also the other area for of course industrial consumer, consumer, commercial landscaping, and so many other things.

As we went down through that there’s the mantra that we all use, is reduce, reuse, and recycle. Our goal with WaterBit has been to help with the first element, the reduction in use. Within that, we focused on agriculture. Today WaterBit is a multi-layered technology company that starts from the basic physics of sensing for which by the way just today we were notified of a National Science Foundation grant award, Roger, this is great news for us, we got the grant, and as we’ve gone through this we identified the multiple layers of sensing, signal processing, data transmission, and so on so forth. But essentially what we ended up with was in order to improve agriculture, the efficiency of what is done, we all look to data science.

The biggest problem we have is that there’s a lack of real-time ground truth affordable and granular data. Remote sensing data is interesting, it gives a lot of qualitative information, but the farmers that we work with do not use remote sensing information for quantitative analysis, at least not yet.

This is the area that we focused on. We have now built out a company, got some traction going. We have a bunch of customers waiting for us to get on with it and get sensing systems out to them. This, in a nutshell, is what we do. We are a full stack engineering company. We solve the problem of water, focused on water use. I welcome any questions related to how we can help reduce the use of water in agriculture.

Roger Royse:

Okay, thanks very much Manu. We’ll be circling back to you with some specifics about using big data to reduce water use. Steve, we’re going to go ahead and hand the screen over to you now because I know you’ve got a few slides that you want to run through. Let us know when you have it and you’re ready to go.

Steve Jordan:

Morning to most of you. My name is Steve Jordan. I’m the CEO and co-founder of Packet Systems. We started as an Internet of Things focused company and at some point decided we needed to find some particular big problems to solve, and we also chose water similar to WaterBit. In particular, we’re trying to apply Internet of Things technology to water infrastructure. It turns out that the water infrastructure in most of the Western world is aging. A lot of it was built in the golden years I would say from the ‘30s to the ‘50s when interest rates were ultra-low, and it’s aging out.

Now people estimate that 20 or more billion dollars are required to upgrade the infrastructure, but they only spend about 10 billion currently. The money isn’t really there to spend what people think is needed, and the aging infrastructure basically tends to leak or cause contamination. These leaks don’t heal themselves. They get worse over time. What we’ve concluded is we can help utilities find them.

Most of the leaks are discovered by the public. The technology is somebody sees water bubbling up and calls it in and says, “Hey, I see a whole bunch of water.” That’s not really state-of-the-art, and these are, the losses are significant. 10% in California. Compare that too; we have a 20% savings mandate, so half the water leaks out that we could have saved and not imposed upon the users quite as much. The leaks are more significant in the rest of the US and in Europe where the infrastructure is older and basically getting stale.

The technology used on the Internet of Things can really help here. The sensor technology exists. What’s new is having low-cost IoT technology that you can deploy. Our vision is we can deploy it on existing infrastructure rather than requiring a whole new investment in infrastructure. Just looking at I think I mentioned earlier that in the US maybe 10 billion is spent on basically capital equipment in the water utility space. There are about 330,000 broken pipelines per year. There’s a saying that if you could predict where a break was going to happen, and really what you’re doing is you’re detecting a low-level leak before it becomes a big leak. They start small, and they grow generally, due to corrosion in particular. The only kind of leak that starts big would be like from an earthquake or land movement of some sort.

But in any case, if you can identify these leaks before they become big and cause damage, the cost per repair runs from $5,000-100,000, 100,000 being if you damage a lot of infrastructures like a road or a house or other things. That’s what happens in the water business when you have a leak. Somebody reports it, and by then it could have caused a lot of damage. It turns out that if you can deploy this infrastructure, you can get a 50-75% return on that investment and you can basically predict which pipelines to replace. The other problem that you can see is that the industry can only afford … They can’t afford to replace all their pipelines. That’s 40 billion numbers to replace everything, so they have to pick and choose what to replace. By using the technology, we can help identify where the likely targets are to replace.

Just some sort of background on leak detection. The old way to do it was you had people listen to pipelines with probes and put it up to their ear, so not really high-tech. The best practice today is to do a survey every couple of years. So in addition to replacing your old pipelines. Right now people will go out and hire a consultant and try to run through their most likely failure points and try to identify where to go. But we think the real solution is a permanent leak detection system that is in line metering. The idea is to catch leaks as they emerge rather than as they cause damage. There’s a lot of technology that’s been developed to help provide people to go look for leaks. This is half Japanese because this is what’s done in Japan. But they send people out with electronic detection to identify leaks.

What we’re talking about doing is deploy a leak sensor module on existing infrastructure, which is the picture on the bottom right, either a valve, that’s a water valve in the street, or a hydrant, because a hydrant is connected to the pipeline, and then channel that data through a wireless mesh network and into a leak monitoring cloud. That gives us the ability to help the water utility identify and predict leaks. I will stop there and see if I can return control to Roger.

Roger Royse:

Okay, well thanks very much Steve. Appreciate hearing about all the things you’re doing. Those are amazing numbers. Who would have thought we have 10% loss. With that, David Rummler, a strategic advisor in Clean Technology Disruptive business modeling. We’re going to go ahead and add the screen over to you and can start anytime.

David Rummler:

Thank you, Roger, for the introduction. This is David Rummler. I just would like to piggyback off of what Manu said about reduce, reuse, and recycle. Basically, what I focus on, I’ve got, I was most recently teaching entrepreneurship at Stanford, as well as working with new ventures, both in the energy area and the environment area. In the environment area, we’ve got three new ventures. One is in agriculture, full harvest, and Roger knows about that. The other two are in real-time monitoring and measurement of water. When you reuse and recycle water, you need to know that it’s clean. If it’s got a problem, you need to know what that is.

The first venture that I’d like to discuss is real-time water contaminant and monitoring. The problem is that you can’t wait days, hours, weeks for a lab result. When you have for example a batch of pharmaceutical product being manufactured, and you get arsenic in that batch, you want to know right away because you can lose thousands of dollars if not more a product that you have to throw away, or if you’ve got hydrocarbons leaking down at the wellhead as British Petroleum had in the Gulf of Mexico, that cost them millions and billions of dollars because they had no way of knowing that they were leaking hydrocarbons down at the wellhead. The current instruments are complicated, they don’t work, and they need to operate in a harsh environment like down in the Gulf of Mexico or down in a fracking site.

Next slide. The solution is using nuclear magnetic resonance technology, which was developed at the Lawrence Livermore Laboratory in Northern California, not far from Silicon Valley, and you can actually, it’s real-time, you can measure parts per billion, parts per million, it’s field-deployable, it’s robust. You can not only measure, but you can monitor real-time, and this is extremely important for a lot of water applications.

Next slide. What we’ve been doing with these ventures is focusing on how to build a disruptive business model, so that’s a model of models, a market model, development model, value structure model, costs, resource, pricing, and revenue. If you look at the first step, market discovery, I’m going to dig into it the TAM. It’s called the Total Available Market, and that’ll give you a sense of what we’re doing within this area of water contamination.

Next slide. If you can see this side, basically what we did in the first column, water use, we broke it out by potable water, gray water, and industrial water. Can’t really show all of that. This is a spreadsheet for this particular presentation. Then we had industries and markets, and then we had size. You can see over on the red; those are things that we can’t monitor. We went through this whole exercise of identifying the total available markets and the subset of that which we can address with the technology.

Next slide. The third area, the other venture that I’ve been working with is still in Stanford, and it’s real-time pathogen monitoring, and they use microfluidics, which is a fascinating technology using a silicon nanoscale technology that using ultraviolet light they can actually tell whether it’s E.coli or one of a couple of dozen different pathogens. Why is that important? Well, for example in agriculture, if you’re processing say fresh vegetables and the wash comes out with E.coli on it, you want to know right away. You don’t want to wait hours or weeks to get a lab result. Real-time monitoring is extremely important in this application as well. Again, these need to be real-time, field-deployable, et cetera, and it doesn’t matter. There’s a bunch of applications for this too.

Another one is for example in, well, most of you probably heard of Legionnaires disease. When it gets into the ventilation ducts, you want to monitor that, and you want to know when you’ve got that problem when you want to stop everything and clean the ducts.

Next slide. That’s basically just a couple of ventures that I’m working with that are really exciting in the water area, again, focused on reuse and recycled. Over to you Roger.

Roger Royse:

Okay. Thanks very much David. Whitney, I know you’re there. Do you have a few things to say as well?

Whitney Muse:

Yeah, definitely. Yeah, Roger, thank you for having me. I’m really excited to be here. I manage the water and agriculture practice at Village Capital. We’re a group that supports and invest in startups, solving major global challenges. Water is obviously a huge component of that challenge. What we’ve been doing for the past few years in this space is looking at the agriculture industry. We actually manage the longest-running food and agriculture accelerator food programs in the country. We’ve also managed a two-year program in water. We also have some synergies in the energy sector and health as well.

Ag has been talked a lot about already with some of our colleagues, some of the panelists here. I’m going to talk about some the challenges and also some of the solutions that we’ve seen at this next All right. Okay. We all know the data points. About 70% of fresh water is used in agriculture, sometimes even more in some of the western states up to 90%. There’s also a lot of interest in this sector. Just this past year over a quarter of all Ag tech investments actually went to water tech, but we still see a lot of unmet challenges out there. Farmers are still having to deal with drought, flooding, managing volatile weather patterns, but we know that tech can solve a lot of these problems. So why are they persisting?

One of the things that we believe at Village Capital is that there are a lot of great ideas out there in the world. Those entrepreneurs actually typically lack access to good markets but also the network that they really need to scale their business. We work with entrepreneurs that have a lived experience with the challenge that they’re trying to solve. We bring them together in cohorts around a specific challenge in that sector, and we also convene them in a place that has an in-depth knowledge of that challenge.

What we found is that some other interventions around water tech do not have these types of components. They’re not working with entrepreneurs that have a lived experience, and at times this develops really inefficient and ineffective solutions. I’ve talked to farmers before that have told me, “I have a lot of fatigue with entrepreneurs coming to me telling me they have a new solution for my production system, but they actually don’t have intimate knowledge of agricultural production, and instead of telling me how much water I used last year, maybe if they had more actionable information on how I can benefit my production system, that would be more helpful.”

What we do at Village Capital is we look at all these ideas that are out there that do have relevant solutions to these challenges, and we try and think about how we can empower those innovators to build scalable solutions. Our model at Village Capital is more of a bottom-up approach to venture capital. We have a huge emphasis on peer collaboration because we believe these entrepreneurs have really great lived experience and can actually advise one another. They’re all working on a similar challenge. They’re also living and breathing what it’s like to be an entrepreneur, so they’re well equipped to advise one another on their business.

But we’re also creating a place for other key stakeholders in that sector to come together, whether the corporations, policymakers, foundations, investors. What we do is we curate a group of entrepreneurs that are working on this particular challenge, and we bring in outside mentors and investors to help commercialize their business.

Ultimately at the end of our program what we’re hoping to do is democratize the process of entrepreneurship through what we call peer selected investment. At the end of our program, we have the entrepreneurs participating in that cohort actually select which of their peers should receive investment for that cohort. We’ve had a lot of success so far.

A couple of our portfolio companies in the water space and in the Ag space are listed here. Energy is an Atlanta-based company that’s developed compact hydropower turbines with a proprietary magnetic gear drive that’s more efficient than traditional mechanical gears. They can generate electricity from low-flow water, so it doesn’t have to have a high-pressure water systems. Unlike solar, wind energy, they can actually generate electricity 24/7.

Futurepump is an entrepreneur out at Kisumu, Kenya, and they’ve developed some lightweight, durable solar-powered irrigation systems for farmers in East Africa. Spensa technology and Stony Creek Colors are not directly related to the water sector but are in adjacent categories in Ag. We’ve seen a lot of synergies obviously within the agriculture sector, but also some really great opportunities to bring entrepreneurs together from both the water emphasis side but also agricultural production side, and future partnerships and collaboration, but also as a mentorship component to it too. That’s about all that I have, kind of a big overview of what we’re doing at Village Capital, our model, our vision, and then also a peek into our portfolio companies in water and Ag.

Roger Royse:

Okay. Well, thanks very much Whitney and thank you, panelists. As I listen to this, I can see that water tech can cover a lot of different areas. I mean, I’m hearing security, conservation, storage, even production with new pumping and D cell models. But I want to focus a little bit on starting with on I guess what is the conservation aspect and coming back to you Manu with precision agriculture. I think that precision agriculture when it comes to water is really a matter of getting by with less, and more efficiently using the water, targeting the water.

Out here in California, we’re suffering through a pretty long drought. That’s important. But the question I have for you, and if you know is, how significant can this be? Is conservation going to be enough for most of these farms to survive in these sorts of drought conditions? And is your technology, is that a final solution for a lot of these farms? I know some of them just weren’t able to get by because of the water situation.

Manu Pillai:

I think the question is actually quite what I’d call or put them in the seminal thinking category. If you take a top-down view of what’s going on, I’ve spoken … My co-founder and I have spent several tens of thousands of miles driving up and down California and pretty much every week we do a couple hundred miles. This week we are going to, we were up in Woodside at a vineyard, and next week we’re going to be in Huron, Chico, and Salinas the week after. We get around.

Where I’m going with this is that our statistical review of data, plus discussing face-to-face with growers is that in California the Central Valley agricultural capacity exceeds the available water by over 1.5, a factor of 1.5, assuming that there’s a full disbursement of water from the Central Valley Project, which means that at this point in time the agricultural industry is already overbuilt. In other words, even if I was to look at the only way to achieve that is by radical effort on conservation, perhaps a change and then a market-driven change in crops, and also a much more of … a policy based initiative too for water storage, which is a different problem, which is way above my pay grade. But without improved water storage, we will also have a problem.

Those of you who are watching climate change, if you’ve checked recently you will notice that the snow cap in the Sierras in California is pretty much all gone, and we’ve only, we’ve not even reached July 4th. So it’s not just that we have to have snow. The snow has to persist. These issues mean that at a fundamental level we are working in an environment where every drop has to count. Now to give you an idea where things are heading when we talk to some of the growers we have growers talk to us and how many acre-feet of water they spend on irrigation.

Next week we’re going to be … Actually yesterday and next week as well we are in a vineyard in Woodside, not far from Silicon Valley here, where our client uses not more than 12 gallons of water for a vine, and that ends up being that when you work out the total water consumption of the growing season, his consumption is less than 1% of what other vineyards are consuming in the Central Valley. I believe that there are dramatic improvements we can make in conservation. The only way we can do that is by having highly granular systems, which is kind of why WaterBit exists. This is where the data science comes in. There is enough variation in soil conditions even in a nine square meter zone that if you could afford it, you could actually have pro-tree or pro-vine irrigation.

My goal as the CEO and founder of WaterBit is to make that affordable. We are pushing the cost of sensing systems in closed-loop control systems, meaning the ability to have a sensor with a valve to control the water flow and bring that down to a single plant. We will be at that in about two years where we will be able to control that very tightly and drop the water consumption. The side benefit of that, of course, is that I grew up in an area where we can call it agriculture 1.0 compared to as Lance Donny would say 3.0 in America. Being able to drive precision control down to a nine square meter zone means that we can make things that are affordable for use outside of the United States, in China, India, East Africa, South Africa, and also West Africa. There’s not too much in the Sahara, but you get where you’re going.

These are the kind of things that WaterBit is trying to do. We are trying to bust out and make a fundamental difference in the affordability and precision of control where the net result is that we hope that on average we can drop consumption by a couple of percentage points across California, but we know that there are people that know you’re going to use 12 gallons per year for a vine. I mean that’s just off the charts. There is a possibility, and the big question is conservation enough? I don’t think so. I think we have to have a fundamental change and add more to the meaning of what conservation includes, including policy level changes that need to be driven through the ballot box as well. Long answer to your question. I hope that was okay Roger.

Roger Royse:

No, thank, thank you. Before we leave conservation, Steve, I want to come back to you because you’re doing sort of the same thing. Your technology is reducing I guess waste. I was kind of surprised at the numbers on your charts there. I guess my question is how significant an impact can technologies like yours have, especially in the agriculture, because I heard from Whitney that 70% of the water we’re using out here is to agricultural uses. It seems to me that if we can reduce 10% of the waste that’s a pretty significant change. Can you comment on that Steve?

Steve Jordan:

Well, sure, particularly I guess I can comment on the drinking water side. There’s waste and leakage on the customer side of the meter also, which is addressed by other technologies. We’re not focused on that because there is an industry already one after that. But that could be a few percent of customer leaks that occur. We think the big number is on the infrastructure side, primarily because the infrastructure is so old that, yeah, it is surprising that California estimates 10%. It’s worse in the Northeast because there are hundred-year-old pipes believe it, or not and then Europe is similar to that. A lot of stuff’s 100 years old, and it’s really hard to fix that.

Now on the agriculture side, I agree that much more of the water it’s not treated water, but it’s not salty either. The bulk of the water does go into Ag, and I’m sure there are leaks there. I think the focus is really as Manu has described on how to apply the right amount because it’s really easy to overwater, but I’m sure there’s a leak component to this. But this is much cheaper water that’s used in agriculture.

I think our focus will be on drinking water where you’ve invested a lot to make the water clean, chlorinated, hopefully all the infections have been removed, although I’m intrigued by David’s description of the real-time monitoring, because one thing we see is to go after, looking for contaminants in the drinking water system also. But that’s kind of I would say down the road. So conservation, if you can get 5%, you can save half of the 10% that’s leaked, it goes long ways toward achieving the state’s conservation target.

Roger Royse:

Yeah. I was going to talk about that unless any other panelists want to weigh in on this as well.

David Rummler:

This is David Rummler. I’d like to weigh in on the broader topic of conservation. There’s actually a group at Sanford, some of my colleagues here, who have got some technology and are prototyping it down at Southern California to basically capture stormwater runoff and recharge the aquifers, and that’s a part of conservation too. Before it gets into the infrastructure that Steve’s addressing, you need to also get it into the aquifers. Right now a lot of that water just goes right down the river and right down to the ocean and never gets used. The big problem is that there’s water all over the place, but it’s not where it’s needed. I think that’s an important part of conservation is a stormwater runoff and recharging the aquifers.

Roger Royse:

Right.

Manu Pillai:

I totally agree with that. This is actually a key thing. This was saying it’s really above my pay grade. It sits at the policy level. We need to improve catchment zone so that the water not only has a chance to store but also has a chance to sink down and recharge.

Roger Royse:

Okay, thank you. Dave, it sounds kind of interesting, fascinating really to hear what you’re doing in terms of security. I think especially these days when we hear so much about terrorist attacks; this has got to be an area of concern, heightened concern for everybody, especially at governmental levels. I have not heard yet until just today about some of the things you’ve been talking about real water real-time monitoring devices. Can I ask, is this something recent? Is this something that is now, suddenly there’s a heightened interest in these sorts of technologies? You gave us two of them. One that detects contaminants. The other one that detects pathogens. What does that look like, that whole area? What’s out there, and what can we expect in terms of water security technologies?

David Rummler:

This is David Rummler. I would say that there’s not much out there in the way of solutions today. The solutions are being developed and prototyped, and there’s just a whole range of applications for both potable water, which is drinking water, gray water, and then industrial water. For example, if you get arsenic in a batch of water that’s used for, and it’s a little off topic, but for semiconductor manufacturing, you got to throw out a huge dollar amount of product that it’s ruining it. Real-time monitoring of contaminants and pathogens, I was just up in Chicago for the fresh produce big conference and every one of the professors I talked to, the food processor said they desperately need real-time pathogen monitoring. They’re cleaning their vegetables and fruits, and they don’t have a clue that is contaminated until days or weeks later. That’s just unacceptable.

Roger Royse:

Yeah, that does sound sort of amazing. It’s good to hear that you’re working on technologies that are going to solve that problem. I heard somebody; I think it was you Whitney, talk about desalination. I’d like to circle back as a few years ago, and we talked about water tech, that’s what we talked about, and there are big projects all over California. We all know that there are challenges with that and it’s very expensive. As an investor, is that something that you would look at? For any of our other panelists, is this a technology that I guess is still maybe the dominant new water production technology that’s out there? Any comments?

David Rummler:

This is David Rummler. I would say that desalination technology is still pretty expensive, but the cost is coming down, and there are big infrastructure investments, both in Northern California and Southern California. It’s a technology that it’s just going to take time to get to be this cost-effective and competitive with other technologies for making water usable, especially seawater.

Roger Royse:

How about filters? I’ve seen thin film filters for purifying water. Is that, and, again, Whitney, is that something you’d invest in, or is that something you would take into your program? Do you see some future in that?

Whitney Muse:

Right. No, I definitely think that that would be something we would be interested in, both from a synthetic filter that you could develop for use in agriculture, but we’ve also seen some really unique innovations around actually increasing the soil productivity and soil health to capture more water and to increase the soil water holding capacity of the soil itself. So not really a direct intervention into water tech, but again, an adjacent category in the Ag space that we’ve been looking at.

Roger Royse:

One of the companies Whitney that you put up on your screen I believe it was a pump. Through our Royse Law Ag Tech program here we’ve seen a lot of different water solutions, several of them are on very efficient pumps, because so much of agriculture here is now groundwater. The trouble we’ve had here in California is that the pumps are going deeper and deeper, and as they go deeper the water gets more, there’s more salinity to it, and that becomes a problem. Kind of circling back to what you’re saying about soil health, we solve one problem, and really maybe we haven’t even solved the problem because the water may not be as usable. Do you see any technologies that help with that issue or any ideas as to what we might see to deal with the fact that there’s less accessible groundwater or at least it’s a lot deeper, they put it that way.

Whitney Muse:

No. Sorry, David and I were talking. Have I seen any technologies around the salt in water of pumps?

David Rummler:

No, there’s … Actually, Roger, this is David Rummler. There’s a technology being developed at Stanford for water treatment, and the first … We’re going to put the monitoring equipment I talked about there, but it’s actually water treatment. It was prototyped in Korea, and there’s a water treatment plant being built on campus just purposely to develop this technology for water treatment. I don’t have the details in front of me, but I could certainly get them to you. It’s called Codiga, C-O-D-I-G-A. If you google that you’ll see some of the what’s going on here at Stanford in terms of building this water treatment facility.

Manu Pillai:

Roger, you bring up an interesting topic here. We have customers that are pumping water from about one-kilometer depth. You can calculate right away the kilowatt hours required just to move a nominal amount of irrigation, and they do actually have salinity problems. Therefore, the current cure for the problem is they buy better water, the surface water at a higher price. They’re on the wrong side of the Central Valley, so they’re in the Westlands water district. This is currently the cure for that is that the … Just like Scotch the water is blended. Then there’s the real-time monitoring of salinity is not currently commercially viable in the soil. Salinity measurement in water is viable but not in soil right now, so that’s a different problem. They are all kinds of probes, but they’re not really economically viable at scale. Today that’s how it’s solved.

In terms of the pump having problems and having issues from coatings and other things, and pretty much every year you’re going to take the pump and go flush it and do some maintenance on it, and that’s right now done in the preventive maintenance area. That’s currently how it’s being handled, but it is a noticeable problem. The crop insurance that all the growers have requirements on monitoring salinity levels not to exceed, otherwise the insurance is pulled. So it is a very seminal issue for a number of our customers.

Roger Royse:

Yeah, you know Manu, you hit on another area that I’ve seen some developments, and that’s in just the markets. You’re right. People can buy and sell water in this state. I’ve seen some technologies trying to make those markets a little bit more efficient and maybe even web-based, but that again, it’s kind of funny, we keep coming back to the regulatory issues. A lot of this is policy, it has laws and regulations, and allow these things to exist. That sounds to me like one area where the state could really help.

Hey, I want to touch upon one other thing. I don’t know if you saw this, but down in LA County … Storage is a big problem in California. We have these big open reservoirs, and we lose a lot of evaporation here. You might have seen that down in LA County, they did this, I don’t know it’s experiment or what, but they dropped these plastic floating balls into the reservoir to reduce the level of evaporation, which seems very clever although it’s probably kind of expensive I would guess. I’m just wondering, and I’ve heard of other technologies being used in other parts of the world to deal with the fact that so much water is lost through evaporation. Have you seen anything like that? I mean, does it even make sense to have these open reservoirs when we have that much loss? Any comment on that? That is an area for new technologies to expand and solve a problem.

Manu Pillai:

I think the challenge is at scale, is the scale of operation. When you start doing that at scale, then it gets so quite expensive.

Roger Royse:

Yeah, that’s probably the problem. I think here in California at least they say that really it’s, storage is the one thing we’re sorely lacking, and that’s expensive as well. Let me turn to I guess to two things that we always look for in these webinars, especially when we have entrepreneurs and people close to the investment and close to the technology as if our audience tends to be mostly entrepreneurs wondering where the big opportunity is. When we look at the water just from this discussion, you can see there are lots of problems to be solved. I’ve heard a lot of different places where there could be improvements in the system. But where would you advise a new entrepreneur or maybe an angel investor to put their efforts and their money and their focus in this area of water technology in terms of solving a big problem that has a big addressable market and can really be a big opportunity? Any comments from our panel on that?

Manu Pillai:

I’ll take a pass then.

Roger Royse:

Okay, go ahead Manu.

Manu Pillai:

If as an investor come invest in our company later, we have a room opening up in a couple of months, I’d love to have you on board. If you’re an entrepreneur or if you’re an entrepreneur or entrepreneurial and if you can code or build products, then come talk to us. We’re hiring.

I think the biggest opportunity, the opportunities that we see if you bill …  If you take agriculture as a simple example, there’s the water consumption; then there’s the food processing. The pathogen detection area is one where I see that there’s a number of opportunities contaminant detection both at the source, during transit, and at the point of consumption are all critical elements related not just to water but also to overall agriculture and food safety.

Whitney Muse:

Yeah, I would say, Roger, I mean if you’re an entrepreneur interested in this space, I would have some close experience or find a co-founder that has close experience with the challenge itself. If you’re working in Ag, talk to as many stakeholders across the supply chain, not just farmers themselves, because there’s a lot of variables within the value chain in food and agriculture that are important to consider, even if you’re just focusing at the farm level. For example, I was talking to a large wine company the other day and they told me actually 80% of their water use is in processing. It’s not in the grape production itself. I think it’s important to really understand the entire value chain of the market that you’re working in.

Roger Royse:

We’ve got a question from our audience here. They’d like a comment on the regulatory environment, particularly here in California around water. The comment is that the prospect of building any water tech company is extremely difficult just because it’s so highly regulated. Any comment about that?

David Rummler:

It’s Rummler. I would say you want to come up with a solution that really gets around the regulatory environment and provides something that people can use right away, especially at the end user level or at the business level, the commercial level. It’s a lot tougher to get changes at the utility level, because, again, you’re dealing with government policy and government regulations.

Manu Pillai:

My view on regulations is interesting. Sometimes they are useful. We have a technology strategy in our company. Our company operates from fundamental physics as I said earlier to electrical engineering, mechanical, all the way up to full stack. We have identified two or three pieces of key legislation that have come out of Sacramento recently that creates a significant vacuum in sensing in control systems that we are essentially taking advantage of. By the time these laws bite in about a year, two years from now, we believe we’ll be one of the few companies ready to fully provide solutions to that headache as it comes up. Maybe regulation is not always the enemy. It can be a friend.

Roger Royse:

Manu, I mean you actually, you mentioned at the start that you just received a government grant. It seems to me this is an area that the government would have such a profound interest in that there ought to be lots of grants on California DFA grants for …

Manu Pillai:

There are in water technology for the entrepreneurs. In water technology there are grants available, water environmental combination, there are grants available from the US Department of Agriculture. The state SWEEP programs enable the farmers directly, well not the startup direct. For enabling the startup to look at USDA and look at the National Science Foundation. Our grant is from the National Science Foundation. Then also look at the Metro Water District in Southern Cal. They don’t have much water, and they have a massive population. They’re a couple of times larger than the Silicon Valley area in terms of population and scale. That’s an area to look at. Those are things I would look at as well.

The other thing I’d really encourage is that there’s a tremendous amount of work that has been done in California in the University systems. We don’t have a close relationship with Stanford. We have a much closer relationship with UC and the University of Illinois. Then the University of Illinois we’ve started work on low-cost pathogen sensing systems for water that we started but we put on hold at a time because it was a timing issue. We have also the opportunity to license technologies from universities, and then you can take full advantage of regulatory issues in your favor to seek SDTR grants as well to transfer those technologies to production.

Roger Royse:

Okay, well, thanks very much. We’ve got several questions here that are very technical, and they’re directed to specific panelists on specific companies, but we’re running towards the end of our time. What I’m going to do is I’m going to go ahead and just pass those questions along to the panelists and let them follow up with you individually offline.

At this point we are at the end of our time, and I want to be respectful of the time, of the panelists’ time as well as our attendees. I want to thank you, panelists, for being here today. I think what we’ve learned today is there certainly are a lot of opportunities and a lot of challenges and a lot of problems to be solved in water, and it’s great to hear about the new technologies that are out there being developed to deal with these problems, especially so we don’t get caught by surprise during the next California drought.

This is the last of the technical webinars or technology webinars in our series. Our next program is tomorrow. It’s on FIRPTA, foreign investment in US real property. Then we’re taking the summer off. We’ll be back next fall with a whole series on the gig and sharing economy, as well as some things around disaster planning. Again, this webinar has been recorded. You’ll find it on Royse University webinar site, the Royse Law Firm YouTube site, and available for download as a podcast in the iTunes Store. With that thank you again panelists and we will go ahead and conclude the webinar.

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