CEO

We've seen how international disputes over oil can result in war, but how about co-operation over water resulting in peace, like it is already doing in the Middle East? It gives you an idea of the rising value of water and why investment in Aquatech is the hot new thing… And just how valuable THE Fintech enabling capital-free Aquatech solutions for businesses and self-reliant communities is. It's called Water On Demand™ and it's not too late to get in on this new asset investment that's just beginning its run. Find out how in this briefing!

Transcript from recording

Opening

Newscaster 1: With the official start of summer just a few days away scientists say a megadrought across the western US could get even worse.

Newscaster 2: Millions of people in the state are now under new intense water restrictions.

Newscaster 3: All right. Millions of Southern Californians are now under new water restrictions amid the state's severe drought.

Riggs: My name is Riggs Eckelberry and I'm the co co-founder of OriginClear, which is a company that is working hard to create innovative, disruptive ventures in the water industry. We're essentially an innovation hub, so we have conventional water companies that we've created in the industrial space. We also have new financial vehicles to create water as a service, which is a whole new area. And we also have division that does nothing but Modular Water Systems™ to get away from the custom water equipment. You know, the water industry in a way very, very backward. And so we have some technology that creates these Water Systems in a Box™, which is very exciting.

Introduction

Riggs: And good evening, everyone. Welcome. And Tom Liakos, "Hello everyone." And we're going to jump right into it every night. Well, by now, the entire world knows because I keep telling everybody that my birthday was yesterday. And as I keep saying, I look marvelous for 99 don't I? Anyway, it was a wonderful time. And I want to thank everyone who did wish me a great birthday. The fun part was last week when I was skiing and minus seven degrees conditions in Montana with my son. So, so wonderful. And of course, taking meetings while skiing, which is always fun. All right. This is Thursday, February 9th briefing number 197.

 And of course, the usual disclaimers. 

Thank you, Brian, for the birthday wishes.All right, so what the heck is going on? Well, I thought I would just feature a couple of crazy graphs just because, hey, you know, we can laugh at some of this stuff, but look at this.

Frozen Concentrate

Orange juice futures. What the heck? Just frickin just took off out of nowhere. Now it's possibl because we've got a cold snap in Florida. But this is kind of crazy. It's been going on for some time now.

Fed Rates

Well, at the same time day before yesterday, Fed Chairman Jay Powell reversed his direction. He was going it was going down. He was talking the rates down. And then when things like eggs and orange juice popped like that, he reversed himself. And you saw how literally the markets went down and then back up in the same hour practically. That was kind of crazy. So we're now back to high rates because Fed Chairman Powell is trying to kill inflation.

Equity Exposure

But here's what's going on that, look at the percentage of people planning to increase their equity exposure. We are down now at a super low level of less than a third of all investors plan to increase their equity exposure. And that's not a great sign for the stock market. The stock market is trying to have a bull market. I don't believe in it. I think it's an illusion. So that's why we keep saying that water is a great space because it's brand new. It's not it's not exposed to all these crazinesses.

Energy Imports

All right. So let's take a look at another fun thing that we've been seeing. We've been seeing a lot of press lately about, remember this?

This was a few months ago when Nord Stream two pipeline got blown up. I'm not going to get into who did it. That's not the function of this briefing.

But one thing that it did do, look at this, this was the natural gas imports into Europe in January of 2021. That's two years ago. And, of course, lots of cheap gas from Russia. A small amount, 1.1 billion cubic meters from this is, I guess, monthly from the United States, all coming by ship via liquid natural gas.

And then look at what happened here, December 2022. Hmm. Interesting. All of a sudden, I notice the overall volume has dropped. Look, I mean, there's a tremendous amount more gas being provided back here. When, of course, Russia went to almost nothing, Norway went down, the US went way up.

US LNG

And in fact, US LNG added 37 billion cubic meters in 2022, more than all other sources combined. And so sure enough, we're now Europe is now relying on assurances that the Biden administration will keep selling this expensive gas. And I just if you're a man of the world or woman of the world, you recognize that so much is based on the amazing relationship of petroleum to wars. So that's that part.

Better for Peace

Now, take a look at this. This is a desalination plant. So I'm contrasting basically between the petroleum wars and what's happening in water. This is a desalination plant in Israel that is feeding water into Jordan. One article, Water for energy is better than land for peace. And just back.

Okay now, Ken just popped a note to me that James Wright, who is an unaccredited investor, will be very interested in our ability to have an unaccredited offering. We are in the last stages of putting that offering together. It's going to be up momentarily. So stay tuned on that.

Israel and Jordan

Back to this story. I did the math here. And so the first desalination plant going straight through to Jordan from Israel will fuel about two thirds of a million homes in Jordan. Jordan uses about 300 cubic meters per year per household. And that, I apologize, that's actually people. And so that's two thirds of a million people. So which is a good start. But what I'm trying to say here is that as global water use rises, we've seen an increase in global use. Freshwater withdrawals have tripled in the last five years. Why?

The growing world population. People are getting less poor, they're drinking more water, they're eating things like beef and so forth, and various crops that require more water. And interestingly enough, people are creating with this biofuels thing, which is supposedly climate friendly, but it also requires a lot of water. Up to 1000 gallons of water, for a single liter, a single quart of biofuel. And also energy demand is increasing.

So what that means really is that as water demand increases, we have on the one hand the danger of having wars around water, but also the very strong benefit of peace coming about through water exchanges. And so I don't think that Israel and Jordan are going to war anytime soon if Israel is providing water to Jordan.

Start of presentation

All right. So here we go with an excerpt from a podcast I did with the fine gentleman, Mourad Fiki. And of course, he's a realtor, has a real estate point of view. Let's see what he has to say and his conversation with me.

Morad: Yes. You're with Morad Fiki for Explosive Growth podcast, where we discuss health, wealth, success and business. Welcome to the show.

Yes. Once again, February 2nd. I hope you're having a wonderful day, wonderful Thursday and getting ready for the weekend. We're going to have a great time. I've got a great guest here with us, Riggs Eckelberry. And he's going to talk to us about water, investing in water and the huge growth opportunities that presents itself. So let's dive right in. Hey Riggs, How's it going?

Riggs: It's such a pleasure and I love your intro, man. You are like jet set.

Morad: Thanks. I'd like to keep things exciting and just bring bring some flavor and creativity for sure. Let's dive right in. Tell us your story and how you got involved investing in water and and what is your plans for the future and anything else you want to talk about.

Riggs: Thank you Morad. Well, the big picture on water is, is that it's mostly governmental, right? This is kind of like the phone system before the breakup of AT&T, right? It's like it was all one big chunk. And when it broke up, it created a much larger industry ultimately than the Internet. So MCI, the Baby Bells, the Internet, etc., etc.. So breaking up these monopolies is very, very good for a particular sector. And if we're talking about water, we've kind of relied on, the government is going to handle it. You know, they're going to supply the water and then they're going to clean it and it's all good.

The problem is it's not all good right now. Water is, we know there is drought all over the place, but in addition, a lot of the water isn't treated right and the infrastructure, even in America, is not being maintained. In the US alone, we're running about currently about $75 Billion a year behind. And that's a lot of money. I mean, I realize there's inflation, but 75 billion is still a lot of money and it's not being allocated.

So what's the solution? If you can't maintain something, then downsize. So the logical thing, that is already happening, is that businesses are coming off the central system, doing their own water management, which saves them money. I can get into that, but this also reduces the load on the municipality, which can now serve people with their existing budgets. So it's a good thing for people because frankly, a municipal water system is all about the people. It's not about making Intel happy, it's about making you and me happy in our homes. So let's make sure that the people who it was intended for are served, and that's done by helping businesses do their own treatment. And that's our mission.

Morad: Wow. And so how can someone get involved and invest in these in these projects?

Riggs: Well, of course, with this monopoly, quote unquote, it was, it was very hard. You could buy a municipal bond maybe, or you could invest in one of the big water companies like Veolia. But that's not direct investment in water projects. Think about the oil industry. In 1980, Apache Corporation created the MLPs, which is basically a master limited partnership, a bucket of oil properties which then investors could invest in. Today it's a 300 plus dollars $Billion segment and it coexists with big oil. And big oil, Exxon is still as big as it ever was, but the MLPs add a lot of disposable capital to get projects done and it's open to any investor.

We aim to do the same thing with water, is to basically say, we call it Water Like an Oil Well™. People can invest directly in a basket of water properties and how is it workable? Well it's very simple. Those properties, those machines are not sold to the business user, they are put out there as a service, water as a service. So we retain, us and the investors, we retain ownership of these water projects, remain our assets and the end user pays by the gallon. Everything is becoming, "blah blah as a service." Well now it's water is a service.

Morad: And so where you're seeing there's a big shortfall in water, $75 Billion shortfall. What do you mean by that?

Riggs: Every year? That's the funding that is not happening to maintain. So you have the other side of that problem is that the operation and maintenance costs, the cost of maintaining the systems have been skyrocketing for years. Just like if you, if you got your old Toyota Corolla, you never maintain it and you keep throwing oil and it drains the oil, you keep water in the radiator and water keeps going out. And after a while it just gets worse and worse and worse. That's what's happening with the water systems.

And it's we're seeing it show up in these problems that are happening in places like Flint, Michigan, you know, Compton, California, Jackson, Mississippi. Even Miami-Dade County has problems. This problem is everywhere. They're just popping up. But there's a much bigger, that's like an iceberg, right? There's a much bigger part underneath and it's dire. I like to say that the water you're drinking from the tap, it won't kill you right away. In other words, it's sanitized, it's bleached, but it has a lot of bad stuff in it. And municipalities would love to do something about it, but they don't have the funding. And so. And they're not going to get it. For some crazy reason, Washington is just not excited.

Morad: But Joe Biden passed an infrastructure bill.

Riggs: $1.2 trillion, right? $1.2 trillion. What was water? 55 billion. That was it.

Morad: Wow.

Riggs: That's less than one year of shortfall.

Morad: Mm hmm.

Riggs: So $1.2 trillion gets us 55 billion.

Morad: Is that money actually going to go to water or is that a hoax?

Riggs: Well, the 55 billion is definitely attributed mostly to replacing the lead pipes that we have in places like Flint. No, no, it's solid money, but it's only 55 billion, whereas every single year we fall behind by 75. So help is not coming. Here's the other issue Morad. I'm look, I'm here in Pinellas County. It's super built up. Where are we going to put a sewage plant? Not going to happen, right? There's a real estate problem. And by the way, people don't love living next to a sewage plant. So where are you going to put it?

Morad: What does a sewage plant do exactly?

Riggs: Well. Okay. So your incoming water comes from either the groundwater or rivers or whatever, gets purified by the city and delivered to people. That's the incoming water. Well, then the water gets used and goes out as sewage, right? And whether it's industrial waste or home waste, it then needs to be cleaned. And either they put it back in the groundwater or dump it back in the river cleaned or the ocean, or it could be recycled. But somewhere you got to clean that water. And that is something that people don't really want to have happen next door. Like, I don't need somebody cleaning poop next door to me, right?

So and the third problem is it takes years to build these massive central systems, whereas you can go out there and put a 300 square foot unit in a brewery in a matter of three or four months, including all the permitting, whereas it's going to take 20 years to put up a central sewage plant. So we believe strongly that the future of water is decentralized, and that opens up the opportunity for investors to come in and go, "Okay, I'm going to get some royalty revenue from this machine being put in service and the customer paying on the meter like he's used to. It's nothing new, right? We're all accustomed to paying for water on the meter, Right. So the businesses will continue to pay on the meter. Everything's fine. And but this time, instead of paying the municipality, they're paying Water On Demand™, which is the name of our project and ultimately the investors who have a stake in it.

Morad: So is this is this system going into the depths of the earth? To where the streams are or where are we finding the water?

Riggs: Okay. There's three parts to the water management problem. The first part is the incoming water, which generally the cities do pretty well. I'm not proposing we do a whole water exploration thing. That's not the most important problem. The second part is treating the wastewater, the stuff that comes out used. The third part is reuse, where you reuse the water on your golf course or maybe even for drinking, etc. right? Israel recycles 90% of its water, of its wastewater. How much does the US recycle? 1%. We throw, and we have these huge droughts and we're throwing away all the water. What's up with that? It's crazy.

Morad: Only America. Only in America.

Riggs: The other thing that's going on is, Listen to this: 90% of the water, the fresh water demand is by industry and agriculture. Only 10% is individuals. Oh, so in California, we're being told to have short showers and watch out watering the lawn, etc.. But we're only 10% of the demand. What about the 90%? Right. And so I think that corporate America is getting a getting a pass on it because they have the lobbyists, etc.. It's a natural thing. But what's amazing here is that when we present them with the solution, like, "Hey, you can do your own water treatment." They're like, oh, and and they look at the terms and go, This is this works out well. Why? Because when I bring the water in, I use it more than once and I don't have to pay for that water. I already got the water. Right. So for a business, it works to put in a recycling plant on site and it makes common sense.

Morad: How much does it cost?

Riggs: Well. So there's, if you're talking about mid-range businesses, this is like a half $1000000 to $2 million. But remember, they're not paying that. They're paying by the gallon a certain amount of pennies. It's pennies per gallon, right? And so it's a fully maintained system with all the expertise fully outsourced. And you don't pay anything up front maybe for a, maybe there's an engineering study, but the actual capital expense does not exist anymore. And we think that's the future. You know, Aquatech is becoming the hot new thing here. You hear about it more and more. I'm here to tell you AquaTech is the next hot thing because everything else has been kind of...

Morad: So how do I invest in this?

Riggs: It's very simple. My company, OriginClear, is a public company and we launch these ventures and currently we're launching Water On Demand, which is this way of bringing investors in. Water Like an Oil Well, go to wwworiginclear.com, There's a green "Invest Now" button, click the Invest Now button, has all the information, and we will then talk to you. There's two classes of people that invest. Number one is accredited investors. Those are the guys who get the royalties. And we have a new offering just launching now for unaccredited investors where they get stock in the Water On Demand subsidiary. Either way, it's a win-win and you're contributing to this movement of improving water by getting businesses to do their part as opposed to squatting on the municipality.

Morad: Is this water drinkable?

Riggs: It can be. When you treat your water, it depends on the outcome. Look, the more you have to treat it, the more expensive it gets. If I say I'm going to make potable water from wastewater, that's a big lift. So typically people go, Well, I'll reuse it for wash downs or for irrigation or for things that don't require drinking water. So you can. Here's the problem with reusing wastewater is people don't like it. They've called it toilet to tap. Well, you say "toilet to tap," how attractive is that? Right. So. So the reality is that most recycling is going to be done for non-drinking purposes only because of public perception and also cost. You treat it to the level where it's good enough for your lawn, basically.

Morad: Do I still want a water softener?

Riggs: Okay. Now, let's talk about incoming water. I believe that all tap water requires purification, and we're not, to be clear, we're not addressing the incoming water. We can advise you. And we have, we were working with a premium hotel chain that has decided to put purified water throughout their hotels, bang! So, not just that bottle on the dresser, we're talking about the shower, the kitchen, everything will have purified water. So we do deliver that. And if I'm talking to you as a homeowner or a home renter, you should get get something, get a Brita pitcher, do something, right? Because the tap water is not going to get any better. The best is, in my opinion, to get one of those under sink systems with the reverse osmosis. That's very good. And then sort of a general filtration system for your whole home.

Morad: So you're going to you're going to install one of these systems per business?

Riggs: Correct. That is, just like how you remember, back in the day, you're too young to know. But I was in the day when we had mainframes and mainframes are highly efficient for themselves. And then the idea of, wait a minute, we're going to build a million PCs, those PCs are going to be, that's overkill. They don't need all that capacity. Turns out it's more efficient. Why? Because the PC is serving the user, whereas the mainframe is serving itself. The mainframe is there only like if you centralize things, things actually become less efficient.

That's kind of what we've learned in the last 30 or 40 years, which is that decentralization is more efficient. Why? Because it's more adaptable. If Morad wants to sit on his computer and really, really bang on it and get a lot of use out of it, he can. But if he wants to leave it idle and go off for a week, that's okay, too. But with a central system, he'd have to like, schedule everything and make sure that he was in line and had the queuing and all that. So we strongly, we see this as a trend, water decentralization is happening, and we are accelerating it by providing capital free solutions to businesses and rewarding the investors for being part of it.

Morad: Fantastic. Any final thoughts as we wrap up?

Riggs: All right. Just remember that at the end of the day, it's about social justice for the people. We want people to be healthy, which means assist the businesses to get off the central system. Now the cities can start focusing on the people who deserve the best water possible.

Morad: Would this work for single family homes?

Riggs: It will. We're not currently in that space only because it's a mass market. There's some very good vendors. For example, Fuji Water has a very good system, but it's early still. It's a lot of expense and it's not the time yet. We need to focus, since 90% of the demand is businesses, well, let's focus on them first, right? That's what we're doing.

Morad: Yeah. Well, hey, I appreciate your time. This was great. This was a great interview. Thank you for enlightening all of us. We'll be looking forward to Water On Demand. And if there's anything I can do for you, please let me know.

Riggs: All right. It's a pleasure. Let's check in in six months, and I'll tell you how it went.

Morad: Okay? I'll look forward to it. Thanks Riggs.

Riggs: Thank you, sir.

Morad: Hope you all enjoyed that for explosive growth. That was a great session with Riggs Eckelberry and we'll see you here next time. Same bat time, same bat place. Can't wait to see you.

End of presentation

Riggs: Mr. Houston, Texas. That was as fun guy. But, you know, this is very interesting because a lot of people are not aware that water has to be cleaned, it's like, and this is, I think, the problem with funding of water projects. Remember, politicians, they work on what people want in the end, right? What the voters want. And it's clear that there's just not a lot of awareness of the need to make water clean. But that's what creates those diarrhea cases, you know, that kill 5000 kids a day and all those stats.

And it's handled by taking it private because it is a huge market. It is, after all, a $5 trillion implied market that is only generating $1 trillion. So I thought that was really, really interesting. And let me get somebody who's I think who is more, I think, more focused. I challenge with the team, which has been how to disrupt a slow moving industry. So this was a short clip. It's only three parts. So very, very interesting. All right, Mr. Andrew Frazier.

Start of presentation

Andrew: Good evening and welcome back to Leadership Live at 805. I'm your host, Andrew Frazier, and excited to be hanging out with you. I'm passionate about small business. My goal is to help 1,000,008 small business owners to grow their revenue, increase their profitability, obtain financing by 2028. So it's 1,000,008 by 2028. Looking forward to a great guest and great show. We're going to talk about something really important to you as a business owner. Business is competitive and becoming more competitive than that.

So one of the key things is to keep your product offering and your service offerings ahead of the pack. You have to be creative, flexible and proactive. So we're going to talk about disruption and some of the keys to being the disruptor rather than the disruptee. So I'm excited about our guest, Riggs Eckelberry, and he's definitely a disruptor and entrepreneur doing great stuff. Hey, Riggs, how you doing tonight?

Riggs: Andrew is such a pleasure to be on board and I love your goal 1,000,008 by 2028. I love that.

Andrew: Yeah. Yeah. And I'm so definitely looking forward to that. I appreciate you taking time out of your busy schedule to come hang out and share your experience and expertise with small business owners. You know, you've done so many things that I can't really give that justice. So you know, what I want you to do is take a few minutes to really chat a little bit about your journey. I know you've had several businesses and been in different industries. Be great to sort of give people some perspective on what you've done, where you've been, some key lessons learned, and then we'll dig into it even further throughout the show. Fair enough?

Riggs: I love it. I love it. Well, Andrew, thank you very much for the opportunity. So my upbringing really was in the sort of international area. My dad was a Procter and Gamble country manager, so we went from country to country in the fifties and sixties. I was born in Canada. We went to Puerto Rico, Venezuela, Paris and eventually Brussels and back to Paris. And I look at that, you remember the show Mad Men. Well, my dad was that, you know, John Hamm with, you know, some of the flaws as well, but also some of that amazing facility.

He could, an American in Europe in the fifties could literally meet with anyone. Head of state, it didn't matter. And tremendous sense of projection. And I got a lot of that from him. He eventually sent me to to school in the States. And that, frankly, was a culture shock, complete culture shock. Out of that, I formed my first goal, which was really to work in the nonprofit space to quote unquote, change the world. And for about ten years, I worked for no money at all. And, you know, 80 hours a week, no money at all. And it was very rewarding.

I came out of that experience in the early eighties and aside from, you know, working in nonprofits, etc., I really felt that the world was on the verge of major disruption. And the disruptor was technology. So I ended up in New York City in the eighties helping to computerize businesses for the first time that we're still operating on those old safeguard ledgers. You know, bear down hard because it's a carbon copy kind of thing. And moving them into the early, what we call super micro computers and networked PCs and so forth, and learned a lot from that. I learned that you do not want to be undercapitalized. That's, if you're going to try something ambitious, make sure that you have the resources to do it.

That led inevitably to the early nineties with the dot com, and that's really where I found my most joyous time because computers were now being used not just to calculate but to communicate. And we've seen the world has changed in so many ways since then. I mean, I even look back at, you know, ten years ago, five years ago, how things, different things were. So here we are. Fast forward through year 2000. I had a series of wins, sold companies. The usual thing passed 2000. Eventually I got to be a CEO. But surprise, surprise, I was handed a non-tech situation. The company that I managed to convince some good friends of ours, of mine who back companies that I could be a CEO. And I got. The good part is you get to be a CEO. The bad part is you get to be a CEO, right? So all of a sudden there I was and infinite adaptation is what it's all about.

We started the company originally called OriginOil because we were a pioneer in using algae as an as a petroleum, as as oil. And so it was the original oil. And I had the best time. I was on all the the top news shows, etc., because, you know, who knew? Wow, Algae. You know, I was called I was called algae man on a Fox Business news and so forth. But the problem is that the floor fell out of the algae industry for biofuels when fracking destroyed the price of crude. And as a result, it just became a science experiment.

And here's where I really had learned lesson by then to not give up, but instead to pivot. And so we pivoted the company into water. Now, disruption is hard, but at least in high tech, it's expected you disrupt, you move fast, you break things up, you have things changed at the speed of light. Not so in the water industry. The water industry is very governmental and slow moving, in part because of public health, but also because, weirdly enough is it doesn't have enough funding to do its job properly. And so I spent a number of years trying to sort of figure out how do I find a disruption point. And I'm happy to say eventually did. And here we are today.

Andrew: Definitely. You had a really exciting journey and international experience is great. I've done some traveling and work with people internationally, but it just brings out a whole different dimension in your level of perspective and knowledge. What would you say is the most valuable thing you learned from working international?

Riggs: You know, the strength of America is that we are unified and integrated. It's also its weakness because we're not very aware of other cultures as much. The cultures come into us and they're expected to integrate with us. Well, you learn when you go abroad to Greece or to, you know, Germany or whatever, that you're expected to integrate with them, right? You're, we've heard about the ugly American, right? Growing, growing up in Paris, me and my brothers would would walk 50 yards ahead of our American parents like, please, I don't want to be anywhere close to those loudmouth American parents. We wanted to blend in. And so you learn, really, that there are so many other viewpoints and worlds out there. And it's humbling. It's humbling. And I think that you understand that while America is an amazing thing, it's not the only thing.

Andrew: No, no, Definitely, definitely. I traveled to South Africa and it was kind of interesting because I wasn't black anymore, I was colored. And so it's a whole different perspective. So, yeah.

Riggs: Was that pre apartheid or after?

Andrew: That was after that was around 2000. But yeah, definitely, I guess just the different definitions, different perspectives.

Riggs: Wow, so fascinating.

Andrew: So, kind of interesting. We're going to jump into disruption. Tech is always expected to be disrupted and continually disrupted, but this disruption is really moving to most industries. And if you're not the disruptor, you're the disruptee. And you know, there's one position that's much better than the other. So as a small business owner, you know, it's important to sort of understand that and want to really talk to Riggs about how do you even, well, let's start with the first obvious thing, 101. What does it mean to disrupt and what is disruption?

Riggs: Yes, that's a fascinating thing. And I was, as you were talking, I was thinking back to year 2000, which for tech was a massive extinction event, you might say, where a lot of BS dot coms met their their well deserved end. And one of the things that happened for me as a marketer was that during the nineties I had budgets to survey things ahead of time and really do a lot of research. After 2000 those budgets went away. By necessity, I had to find a better way to find success with marketing, with business. And I eventually branded that as something called mistake based marketing.

Mistake based marketing basically says I'm going to consciously try things out and look for failure, but quickly remedy. As they say, "Fail early, fail often." Right? So, and by the way, that's one of the big differences between American culture or business culture and European business culture, where failure, for example, for a German entrepreneur is not an option, right? So, in America, we are permitted to fail. The key is to fail while learning rapidly. So, I applied the same thing to the water industry. It was truly painful, but I think it works very well, which is try things, try things, try things. Don't be afraid of trying them, but be willing to kill the things that don't work or adapt them or come up with a better idea rapidly and don't own your failures, you know, don't like bear down harder. Like, you know, I'm sure I'm right, I'm sure I'm right. And before you know it, you've sunk deep into it.

Andrew: So. So you almost could be, take a little bit of credit for lean.

Riggs: Lean, lean manufacturing. Absolutely. Of course, 100%.

Andrew: So, so yeah.

Riggs: Agile, Agile development, all those philosophies, scrum. These are all, in the programming world they realized that the problem was that one developer is very, very efficient. Every time you add another developer, you become less and less efficient. And so then they came up with the whole agile development and as you say, lean manufacturing as ways to rapidly adapt to what works and what doesn't. And that actually fixed a lot of the problems inherent in a group enterprise. Absolutely.

Andrew: Yeah. No, actually my wife's in technology, so she, she does. She did the original waterfall and she's doing Agile. She's actually bringing Agile to her new company.

Riggs: Wow. Fascinating.

Andrew: Yeah, it's exciting. And it works, you know, and because like you said, the speed of change gets faster and faster. And if you're not keeping up with it and keeping your requirements and your tools updated, it's difficult. One thing you said in the beginning was, you know, if you're disrupting, you don't want to be undercapitalized. However, most small businesses are undercapitalized. So how can we work through that or what would you recommend as far as...

Riggs: Well, okay, So Peter Thiel talks about, "Are you doing a one plus one business or a zero plus one?" Right? So your plus one is from nothing to something. And that's very, very challenging and that's where capital is super important. One plus one is you're simply doing a better job of an existing model. For example, you start an Amazon business and by now we really know how to build Amazon businesses and you need to follow the successful methods and then do better. But from day one, you can be making money and do well because it's a well trod path. So that's I totally believe that, you know, it's well worth doing.

Now if you get into the 0 to 1 thing, that's a different challenge altogether. Let's take my experience in the eighties, which was a, Oh my God it was a learning experience, because I actually ended up giving away that business to my best salesman because I got discouraged. What I didn't realize was, I was computerizing businesses for the first time and it was unbelievably painful. I could charge money, but I could never charge enough to really make it worth its while. What I didn't realize was all the money was in the long term relationship. Once you get a computer customer, as you know, you're the, you're the IT shop for 20 years if you do a good job, 25 years. I was talking to Juan, the guy i gave the business to the other day, and he said, "I still have businesses that you and I acquired in the eighties. They're still customers today."

Think about the life cycle value of that customer. And so it pays off that you, you know, did their sort of virgin experience and you broke them into IT and educated them and it was painful and hard. And then you get to have the relationship, which is where it pays off. And so it's important to find where the money is in what you're doing. And so it was an incredibly valuable business. I didn't fully realize how valuable it was at the time. Juan realized it eventually and he's made millions off of this business that I created in the eighties and all the more power to him because he understood that.

So, I think of all the things to remember is that the long term revenue of a business, the annuity value, the recurring revenue is the most important thing that you can think about because you're marketing expenses usually very, very high. Creating new customers is very high and a lot of businesses lose their customers where they could follow up with them. You know, I had, my blinds are up, but, you know, I have these motorized blinds and the company sold me the motorized blinds and went away like, well, they could sell me other stuff in this condo. I mean, there's a bunch of other things they could think of, but, and I like them, but they went away. And so you've got to think about how do you continue to monetize the customer relationship that you've spent so much money creating.

Andrew: Great explanation and answers and examples. Being able to take and self-finance and try things to disrupt is still a path that we can take, even if we don't have external financing. If you have the right mindset, you may do a very good job. Really, fully understand exactly what's going on in your industry and can potentially see where the challenges and where the opportunities are.

Riggs: I'm in a capital intensive business because what we're trying to do is revolution, revolutionize the water industry and we're enabling investors to invest directly in the new generation of localized onsite water treatment systems. And that's very exciting because we're literally in the business of of raising capital to be put into these assets that generate income. And I tell you that investors love it. I mean, yeah, it works like an oil well, but it's not oil, it's water. How cool is that, right? So the important thing about if you're going to go for capital is how to make the capital pay off and not just cover your burn, but actually create investing opportunities that drive people into good, strong asset portfolios.

Andrew: Excellent. And you said a little bit about what you're doing. You know, my understanding, and make sure that I have it correct, is that what you're really doing is enabling businesses to really be self sufficient with their own water in terms of treatment and everything. Which one, creates more water for everyone else. and, also businesses use probably what, 90% of all the water, so it's, the market can be really big. So, is that right? Did I miss anything?

Riggs: No, that was very well said. So here, here's the problem we have is that we think of water as being supplied and treated by the government, you know, municipalities, counties, water districts, etc.. But the problem is they're underfunded for some reason. You know, the federal the state, all the way down to the counties and cities do not allocate enough money to properly treat the central systems. And as you say, 90% of the freshwater demand is by industry and agriculture, leaving only 10% for you and me. But municipalities exist to help you and me, not businesses. So how is it that industry is crowding out the individual consumer? And I believe very strongly that if you're not going to fund the centralized water system, then reduce the load. That's the other solution, right?

So by reducing the load, we're letting businesses do their own water treatment and we become their municipality, their utility, right? And they pay us on the meter. They're very happy. Why? Because they're able to be much more efficient with water treatment by recycling it themselves, and they don't have to pay for it. If I get two or three turns out of the water, well, I'm not paying for that water each time. And it's a very good experience for the company. And it removes the burden from the city. And now the city can start helping the people. I don't know if you've noticed, but we've had some pretty bad experiences recently. Flint, Michigan. Compton, California. Jackson, Mississippi. Notice that it happens a lot with poor neighborhoods, and that's a scandal because they're at the very tail end of the process and they get the worst water.

Well, I think we all should have good water. Tap water, we should not have to be installing filters in every home. What's that all about? The water itself should be what you and I drank when we were kids. We drank from the tap, right? Well, me for sure. You're much younger than I am, but still, water we thought of was not, not something impure. Today, we've been schooled that, you know, we can't drink the water. Well, I would like to do something about that. And so our mission is to make it easy for businesses to do their own water treatment.

This new thing is called Aquatech. Aquatech is hot. All of a sudden, aquatech is the latest thing. And by the way, the world of investing and finance needs something new because they've blown through high tech, they've blown through biotech. They've, all these different spaces are just stumbling. Oil's in trouble because primarily because of politics. And so here we are left with, oh, wow, water. New space is coming out of the government. And as you know, any time that a government monopoly breaks up like AT&T broke up, it creates a vastly larger market through freeing of initiative and disruption. You know, you can even say the Internet came out of the AT&T breakup ultimately, right?

So we have a similar breakup going on. And water is leading to this hot new space called aquatech. But people in AquaTech are complaining that the end users, the businesses don't have capital. So we realized we could be the ones doing this. So our disruption is called Water On Demand and enables, Andrew If you have, let's say, a bottling plant and you use a lot of water and we're going to let you have a water system for your bottling plant and don't pay for, don't pay the capital expense, you might have a 10,000 engineering fee, but you're not going to spend half a million dollars or $1,000,000 for that machine up front. Instead, you'll pay by the gallon.

And by the way, you won't even have to maintain that system. We'll take care of that, too. Well, that's very attractive for a business owner because you, Andrew, are much more interested in your bottling business than in treating the water. So we enable you to just get rid of that problem. And as I was saying, benefit from recycling. And when you recycle, the whole world benefits. It's a scandal that America only recycles 1% of its water, whereas Israel recycles almost 90%. Why is that? It's primarily because we have a much more antiquated water system that was only built with one direction in mind.

Comes from the source. Use it, treat it and dump it. Well, how about use it, treat it, reuse it a couple of times and eventually send it into the ground or whatever so that the more we recycle, we have these big droughts happening and meanwhile we're just being throwing the water, the water into the ocean every time every time California gets a big snowy year like it is getting this year, we get, yeah, it's great. But you know what? Most of it's going to go into the ocean when it melts. Well, hello. Right. Come on.

So recycling is key. We're enabling that to happen. Businesses love it, and we're creating a much larger market as a result. And really, the capital side is super important. Investors can invest in Water Like an Oil Well™, as like we say, but also we have a technology to miniaturize and modularized these water systems so they can fit in that beverage plant. Those are the two parts, the technology and the finance.

End of presentation

Freewheeling Discussion

So I thought that Andrew was a smart, business oriented guy, and I think that he actually paid a little bit more attention to this than the real estate guy. Just, just saying, I think that's how it was. With that, I am going to initiate freewheeling discussion.

Benefitted by Forerunners

Ken: Yeah, no, I would say, yeah, he paid attention quite a bit. I think he also intuitively kind of understood, there I am. He intuitively understood, I think, the model a little bit. The fact that he came up with 90% kind of randomly was pretty surprising. A couple couple notes I took during your conversation with him, you mentioned, you know, the zero to one business. The zero plus one and one plus one. What's very interesting about us is, in theory, we're a zero plus one business. It's never been done before.

But we have this incredibly, beautifully well-worn path of having all of these other companies spend billions failing in fintech, figuring out what we shouldn't have to do wrong. Right. So the benefit of years and years of Amazon and all these other companies, you know, kind of fumbling along and like you said, failing quickly, failing early, failing often and then getting it right. So we're kind of able to enter that space now as a zero plus one business. But with, of course, there's still going to be a lot of things where we go, okay, bad idea, right?

Riggs: You think.

Ken: We did one like or two last week and the week's not over. So, in reality, the big thing, like in other words, there's going to be a certain amount of unforced errors, but the number of them, the concentration of them can be dramatically reduced because a whole section of our business model has already been well thought through and experimented on and successfully executed, not on our dime, right? On their dime, which I thought was good.

The Long Tail

Also, you mentioned about the marketing costs being very, very expensive and the annuitized business. I would have to say that our water assets are probably the definition of an annuitized, you know of an annuitized model, right?

Riggs: It's the long tail. It's a long tail. Absolutely.

Ken: It's not just the long tail. It's the asset ownership.

Riggs: Right.

Leveraging Private Investors

Ken: I say to people, how big would Airbnb be if they owned all the real estate they rented? That's, in a way, kind of what the loose potential is for these, the ownership of these of these assets. Not tomorrow, not next month, but a decade from now.

Riggs: Well, now Airbnb relies on offloading, for example, hotel ownership. Uber relies on offloading car ownership. Water On Demand relies on offloading investment. In other words, we're not, we are not doing all the investment ourselves. We're welcoming investors in. So it's important to recognize that, the things you do not do, right? That you leverage existing resources. Airbnb is brilliant because all the hotel, quote unquote hotel square footage was already out there. It was just private homes.

Ken: Right. And it was, it was often too often, too frequently vacant. So this was it was the remnant space, you know, in advertising. It was the remnant space for hospitality.

Riggs: Gene Tully says, "OPM." And that's right. It is about, look...

Ken: And it was. No, go ahead. Go ahead. Thank you, Gene. All right. Go ahead. Go ahead.

Riggs: No, go ahead, speak.

Ken: Okay. I often describe to investors or prospects. You know, our growing manufacturing business tripled last year. Okay, great. And if it doubles this year, next year and every year for the next ten years, it couldn't accomplish a tiny, tiny, tiny fraction of impacting the market because the market is so massive. But, with worldwide capital deploying not to us, but we are the conduit to all these. What do 100,000 water treatment manufacturers all have in common? 80% of their clients are going, "I don't have any idea where I'm going to get the money. I don't have any idea where I'm going to get the money." Right?

So literally, so you have you have capital. Remember our friend, we had a conversation with our friend the other night and he said, "So I've got money, you've got a need for money, I want to make money with what you have." It's basically, it's the same thing. It's a very, it's an elegant, ultra simplified equation that there's so much capital out there that really wants to find an asset based home. An asset based home that hasn't been stomped all over, right? In other words, already kind of grown to where it's very, it's very slow and fits and starts in the global market, have this dramatic effect on it, like interest rates and things like that.

So you have all this capital that's seeking asset, a home for a good steady asset, but still has that Apple in 1984 type thing, right? And what that does is that actually satisfies the massive capital need that these end users have. We're transferring investment capital. From investors who are primarily current investors or small business owners entrepreneurs. You're transferring their investment capital through this conduit of Water On Demand and distributing it to small business owners.

Riggs: True.

Ken: Right, through a private micro utility. I never actually thought about it that way until now. So I'm hoping recording this because that was actually kind of cool and I want to remember it exactly.

Riggs: Well, you know, we're all like, in the middle of the night. "Oh, I got to write that down." But the other thought I had was that Facebook was not the first social media network. The first one, of course, was MySpace. And Facebook did it better. We're not this is not the first time water as a service is being done. In fact, it was trademarked by someone else. What's different?

What's different is we're leveraging everyday investors. That's the difference. And that makes us, so it's always good to not invent everything, right? You don't want to invent all the thing, you want to invent one thing. And two, in our case, one is that the Modular Water technology, which is essential, and number two is this way to Water Like an Oil Well.

Model Encourages Innovators

Ken: But it doesn't matter. Even if you even if you, even if you built the greatest technology in the world, right now, there will be a faster chip, there will be a better mousetrap, there will be a faster engine. There will be a more fuel efficient car or engine. In other words, your having to fight every moment for that chip speed dominance, right, that's a bummer. Our model actually allows for all of these folks to innovate like crazy and become better and better and better. And the better, the better they get, the better our model gets. It actually helps our model. We don't lose market share. We gain it, right?

Riggs: Right. There's a Latin saying si ne qua non. If we didn't have it then. right? In other words, Modular Water Systems is the envelope technology that permits all those innovations to work. So we're basically hosting two major things, we're hosting people's technologies and we're hosting people's capital deployed for these water as a service things. So what I'm trying to say here is the more you host things and not try and do them yourselves, the faster you go, the more you can scale. The third thing we're hosting is we're not trying to do all the building of the systems ourselves in the long run. Short term, yes. And we, as a result, are going to be able to scale this business. So there's three ways. And with that, I must say that we arrived at 9:01pm.

Ken: We're turning into pumpkins. I know.

Upcoming

Riggs: But this is fascinating. It's really, really interesting. And I'm glad I had a conversation with Andrew Frazier to kind of nail it down a little bit. I want to thank everyone. So what's coming up, next week I'm back in New York. I'm going to make the trip myself. The week after next, I'm sorry, the month after next. I'm going to bring Dan Early up, Modular Water Systems. He's going to be on Wall Street. It's going to be great. He's going to be talking up on Wall Street. It's going to be great.  And so what you'll continue to get is reports from the Nasdaq MarketSite, which is kind of cool, while we continue to wrap things up.

About Regulation A

And as I'm saying, this regulation A thing, which is the unnaccredited investor offering is so cool because you'll have direct ownership of Water On Demand without having to be accredited.

Ken: And Riggs keeps thinking, I'm talking about the other thing. I'm not talking about the other thing.

Riggs: The other thing. The other thing.

Ken: You know the other thing. You know the thing, right? No I talking about because. Because, you know, poor James has been so patient. He's like, you know, are we there yet? Are we there yet? Right? And we're finally, you know, we're finally well, I mean, we're, James, we're right there. We're right around the block.

Call Ken

Riggs: It's like, it's like minor, tiny legal things. It's driving us crazy. Okay. If you want to hear about the thing, then you need to talk to Ken directly. oc.gold/ken for the time being, please be accredited. But that will change soon. So everyone, I wanted to thank you.

Ken: I have an entire staff of people to speak to those who are.

Riggs: Your people. I have your people.

Ken: I have people.

Riggs: People. And you're going to award them coffee if they perform.

Ken: Only if they perform. Cuz coffee is only for closers.

Riggs: Exactly. Thank you, Mr. Alec Baldwin. And don't shoot at me.

Ken: Don't. Don't do a film with me. We'll be fine.

Riggs: Amen. All right. You know this watch, this watch is worth more.

Ken: It cost more than your car.

Riggs: Exactly. Thank you very much, everyone. And see you next week. It's going to be an excellent briefing. Have a good night.