In this Live CEO Briefing Riggs Eckelberry Interviews the Managing Director of Permionics, OriginClear's new Asia-Pacific strategic partner which provides an inside view of OriginClear's global presence and strategy. Plus a revealing look at technology disruption guru Tony Seba's analysis of technologies that have transformed out culture over the past 100 years and how this is utterly relevant to today's scene in the water space.
Riggs: Hey guys, welcome to the webinar for the 23rd of January 2020. It's going to be action-packed, there's going to be lots covered. Of course, some of you are wondering about that strange tease that I sent last night about transportation. All will be revealed, believe me. Okay. So, we're going to share this screen and voila.
Water Is The New Gold
The new call sign for this webinar is Water Is The New Gold and our call to action is “Helping You Thrive in the World's Only Vital, Scarce and Recession-Proof Market.
Now, what does that mean? It basically means that water is unbelievably stable. One of the strongest companies in the water industry, probably the largest worldwide, is called Veolia. It was launched in the time of Louis the 14th in the early 1600's, so it's a long-term business, it is recession proof and of course, people are starting to be concerned about recession. Also, water has increasing scarcity. Here's the thing, we have so much water in the world and yet a tiny percentage is fresh and an even smaller percentage is actually clean. So, that's what we're talking about and we'll be pursuing this theme in the weeks to come.
Couple important notices, some housekeeping as usual. Safe Harbor statement. Anything I say in this presentation is essentially a prediction that may differ from what actually ends up happening. I do my best to tell you what's really coming down the pike and really happening, but that is something that all public companies have to let you know.
The other thing is that we are operating under an exemption that allows us to publicly advertise our offerings and therefore we have to disclaim that you must be an accredited investor for these. Also, that this is not registered with the Securities Exchange Commission, and finally that there is risk. So, we try our best to reduce risk, but we can't tell you that there's no risk. Of course, there is.
Prefabricated, Drop-In-Place Systems
The first thing I wanted to bring up was a little report from Dan Early, in which he was telling us on Monday about a project in an island location, which I can't really name at this time, but it's massive - 400,000 gallons per day. Now, we got this through one of our great referral reps and very quickly, it became clear that the people planning the wastewater systems there have a big problem with marine corrosion, with concrete falling apart in the saltwater and so forth.
So, they had to do something about it and they were keenly interested in our heavy plastic shielding for our systems, which is Dan's specialty. It very quickly turned into them changing their specs for what Dan Early and our Modular Water Systems™ business unit are known for, which is these prefabricated, drop-in-place systems. I have to tell you that 400,000 gallons a day is massive. Last week I showed you pictures of a 10,000 gallon a day and a 40,000 gallon a day system. Now, you take the 40,000, which was these two big tubes on the ground, and now you multiply that by 10 and that is the throughput required.
So, he is telling us that there's a tremendous amount of leads coming in as a result of our social media efforts and our presence on the internet. So, he is having just a tremendous amount of business coming his way, which is good. We keep Dan working on weekends. It's a good thing. So, Dan and Robb, his engineer, are working flat out and as I reported last week, they're strongly coordinated and integrated with the folks down in Texas doing the manufacturing.
What's this about forever toxins? I reported on this last week. If you want to check, people have been sending me the news stories for a couple of days now. It's in the Guardian and a couple of those and what it is, is the Environmental Working Group has pointed out that these things are far worse than any of them thought. I urge you to go to Environmental Working Group's website, put in your zip code, and they will report on what is going on in your particular area. As I reported last week, we put out a call and we've been getting some people who are interested in working with us. I'll be covering that further.
All right, moving right along here. Now, we announced this morning our partnership with the Indian company, Permionics and they are a very important company in the state of Gujarat in India, a town called Vadodara, and they have over 10,000 installations. They were founded in 1980, so they weren't founded yesterday, and they have various membrane technologies and so forth. Of course, they have been a licensee of ours since 2017. I did an interview of Satyajai, the managing director last night and I'm going to pull that up for you. Okay, here we go.
Interview With Permionics Managing Director
So, how are you?
Satyajai : Good thanks, and congratulating ourselves for getting into this arrangement.
Riggs: You know, Bill (Charneski) was very persistent and he really believes in you guys and Tom (Marchesello) of course, thinks you’re great. It really helps when you actually send business to somebody.
Satyajai : Yes, of course.
Riggs: You know it's like, ooh we like that! You sent us a dozen of these water treatment systems, specialized ones and I really appreciate it.
Satyajai : Hopefully there are many more to come this year.
Riggs: So just to quickly ask you a little bit about this relationship, it's a partnership where essentially you're going to be handling business in Asia-Pacific for us or either directly or through licensees and then we'll get a combination of the licensee royalty perhaps with your commission, there's a whole fee scale and you know, the anodes and so forth. You've been experimenting with EWS +AOx™ [Electro Water Separation™ + Advanced Oxidation], and we're not making this discussion exclusive to that, but what is your take on this technology so far?
Satyajai: Somehow it just fell into place that the oil and natural gas company here were interested in produced water treatment and we realized that this technology did have a good potential for oil water and more. At that point we went and did some pilots at quantity for longer and found that we got fantastic results on combination of EWS and UF (Ultra Filtration) because we apparently have an excellent UF for oil resistant UF – kind of worked out very well.
Riggs: How do you see this fitting into your company's general strategy in the Asia Pacific region?
Satyajai : Well I think, as Anil has been talking about all these years about a new avatar in terms of Permionics. We are talking about Permionics being a solution provider and that requires a toolkit of technologies. It needs multiple stages and different technologies. So I think EWS, I think now we’ve got, I wouldn’t say control but, we’ve got access to manufacturing it locally.
Satyajai : I'm sure there will be a much broader application base and maybe we can use it more liberally in our treatment scheme rather than restricting it to a high value application, because I think in the past we've seen that the CAPEX - OPEX (Capital Expense-Operating Expense) doesn't fit the wastewater market, but maybe with this new business model we may be able to hit that sweet spot in the CAPEX and OPEX part where as simple an application as drinking water disinfection or disinfection of hi-saline water prior to any other treatment or membrane to prevent biofouling, who knows? So we will definitely accelerate the use internally as well. And in terms of supporting licensees across Asia Pacific that’s something that we need to engage with the market, and first of all announce that we are out there with a solution and not with just anodes and you know, not with just a piece of the pie. And that’s going to be an interesting journey in terms of finding out how people respond.
Riggs: That’s really good
Satyajai: We take your experience and help in the marketplace. Where you have already got engagements with companies, where you have had connections with companies. I mean there's always, the licensee can be two types: One, he basically doesn't want to deal with hardware, he is more of a thinker and wants to put things in place and see that the whole scheme works out and get someone else to manufacture it. Otherwise, there may be licensees like us, like I think you had one in Malaysia who builds his own system. Sometimes licensees may not like us encroaching into their manufacturing space, so it's something that needs to evolve in terms of what kind of agents or what kind of representatives we have in the marketplace, whether the existing licensees would really fit into this whole equation or not. In terms of us giving them manufactured product.
Sometimes you may have to just give a design and engineering packet, and offer it to someone to produce locally. So, it's going to have its own challenges. But I think overall, it fits in very well with our business plan because it gives us that kind of added oomph to say that we have a solid backing from a technology provider, who is depending on us, who has validated our company and gives us that kind of edge in the market place.
Riggs: Well that's amazing because we've been looking for this kind of close relationship. We know that our technology has got to integrate closely with other technologies to fit where it should, for example, the disinfection is amazing, because we're working on projects here in the U.S. to create super pure water for cosmetics for example, using already clean water and then doing a final ultra-disinfection step. Also, a licensee of ours, successfully disinfected oil wells in the Permian Basin using our technology, Advanced Oxidation, with theirs. And it's always combining, right? It never stands on its own, and it will lose if it stands on its own. And that's really why I'm so excited that you're going to create whole products with this and I can't wait to see where this goes.
Satyajai: Yeah, I mean I think it's, it's early on, but we have some legacy about using the anodes and I think we've got a lot of background technical information, which I think JL [Jean-Louis Kindler], who previously headed the Technologies Division and is now a director of the company] and his team have translated down; and I think we’re going to take that, and do a lot of back and forth with your technical team and see how we can use each other's strengths to get to the market faster. But as of now, I see that we need to recreate a solution, recreate a product which fits into a solution because of the nature of our arrangement. Focus a little more on the electrodes, on the technology per se and use it more as a mainstream process rather than niche process.
Riggs: Ah, that's music to my ears, Satyajai, thank you. I'm going to be playing this tomorrow for our listeners on the weekly webinar and I'll send you a copy of that and perhaps we'll check in with each other every two, three months and see how it's going.
Satyajai : Sure. Definitely, maybe more often than that. Please do visit. It's an opportunity to invite you to come and visit us.
Riggs: I'd like that.
Satyajai : In terms of your experience and your journey in water and water conservation, what has been your background or experience in that?
Riggs: I came from a high tech background, and in fact, in tomorrow's webinar I'll be showing some interesting data about how disruptive technologies best come from outsiders. For example, Elon Musk, with Tesla, right? He didn't have a car company, and now of course he's dominating. Similar with smartphones, right? You think Nokia and Motorola would have done it? No, it was Google and Apple, who had never done a phone before, and they dominate the market, right? So, what I believe I bring to this is, first of all, a lot of experience in disruption and how to market disruptive technologies. And also, I don't try to reinvent the wheel. I'm not going to try and be a water expert, right? There are people like you, people in the U.S. et cetera. I have a wonderful team in Texas that knows all about it.
And so what I really hope to bring to the party is more of this outsider, like how can we change things, because the way the market is going is towards self-treatment by businesses more and more. The big central systems are not being built. So, it's really interesting you say that, because this is a topic—we now have a COO, Tom Marchesello, who is extremely strong in company operations, we have the Texas team. We're now doing some acquisitions, which you'll find very interesting and you may be able to replicate the model. I think that this is the winning model because the problem with water is, it takes decades for new things to appear and yet we really need help in the marketplace, right?
The water industry needs to do a better job. Only 20% of the sewage in the world is treated and the rest is just thrown away. This is very true in India. And so, if the water industry does a better job it will be done better locally as opposed to centrally. And that's where the growth is. With you as a strong technologist and us as a growing public company, I think we can do great things.
Satyajai : Adding to that information, it’s fantastic. It's like a meeting of the minds, opposite minds I would say.
Satyajai: Complementary, and I think it makes very good sense and would accelerate whatever we are trying to do.
Riggs: I'm so excited that we're doing this and I look forward really getting in gear now and using your amazing integrity and knowledge and your momentum as a strong Indian company. So, thank you. I'm going to turn on the recording now, and say, hi, to our U.S. listeners.
Satyajai : Yes. Hi everyone, and I'm sure we are in for a great journey and I look forward to meeting you all soon at some point.
Riggs: Fantastic. Thank you.
Well there we are and we're going to jump back to the PowerPoint right now and continue because I have something very interesting to tell you about a result from that. So, what I wanted to let you know is that there is an outcome from this, which is, that following this interview I received an email that I've been asked to give the keynote address at the annual Indian Membrane Society meeting on February, the 14th to the 15th, in Chennai, India, and I'm extremely honored. So that's what that's about. We'll be covering it of course in video and have fun with it. So there'll be more. We'll announce it and so forth.
Upcoming Regulation A Offering
So, there is some news. This week we filed what's called a Regulation A+ offering. I have been working on this for a long, long time. Not going to mention in detail because we're going to formally announce it next week, but it is filed publicly and it really is my long dream that we would have an offering for unaccredited investors and use the internet properly. Anybody can invest up to a certain percentage of their income and they can do a minimum of $500. It's a very simple investment. In fact, it is more of a dividend paying instrument than a specific stock instrument. And so we believe that it's going to be very, very healthy for people to invest something that's a stable instrument in our opinion. And of course that is going to help us fund our growth through acquisitions, retiring our debt and so forth. I'll be talking more about that and we'll be doing an announcement next week. So that's that story.
All right. Technology disruption. What the heck is this slide and why are we saying that this relates to water? And that's a really, really good question. The truth is that I'm going to play a little clip, in fact, and we'll be able to listen to someone making a very important point about this very shortly. So without further ado, I am going to play this. And that was just testing it. Now I'm going to hit the share button and we will jump into it. So here we go.
Robin Hood Conference announcer: Let's start. Please welcome Tony Seba, from Clean Disruption Inc., here to talk to us about why energy and transportation will be obsolete by 2030.
Tony Sheba: Thank you. Thank you Robin Hood. Thank you so much and thanks to you all for being here tonight. I am going to take you to the future of energy and transportation. But before I do that I'm going to take you into the past. New York city, we are in New York, Easter parade, 1900. We used horses as our main means of transportation for thousands of years. There is one car in this picture, one car in a sea of horses. Can anyone see the one car in that picture. There, one car. 13 years later, can anyone see the one horse in that picture? That's all it took, 13 years for New York to go from all horse, minus one, to all cars. This is more than a century ago. This is the very definition of a technology disruption.
So what is a technology disruption? It's when new products and services create new markets and, right then and there or eventually, they radically transform industries or actually collapse a conventional industry. And one of the things that are interesting about disruption is that, tastes and preferences change very quickly. So, what happened to all those horses that were disrupted? We ate them. I mean not we, not you or me, but essentially they became fashionable, as meat, right? And that's what happens, tastes and preferences change. And pet food was made with horse meat for a long time, for decades. That's in America.
So I'll take you to 1985 when the then largest telecom company on earth, then largest, hired McKinsey to answer one question: in 15 years, what's going to be the adoption of this new thing called, the cellphone? 15 Year projection, McKinsey, their answer was 900,000. In the year, 2000, AT&T, you're going to have 900,000 subscribers. The actual number was 109 million subscribers. This is not a small mistake, right? This is a factor of 120 times, right? My little dog could have done better, and not charge as much, right. But you know, the thing is, that it is usually experts and insiders and mainstream modelers, who dismiss disruption opportunities. Really, really smart people with a lot of data or access to a lot of data. I mean, the cover of Forbes magazine in November 2007”: “Can Anyone stop Nokia”. What?
Riggs: All right, well, I'm not going to play the whole thing. You can certainly catch it on YouTube. I think it's a really, really important video. It's Tony Seba, Clean Tech Disruption, is his firm, and this is the presentation he made in October of 2019, to the Robinhood Investors Conference. But here's some points he made in the rest of the interview.
You saw how in 13 years there was a radical shift from horses to cars in transportation. Similarly, there was a dramatic takeover to the cell phones, and he goes on to talk about what happens, what's going to happen in the transportation industry. That was that graph that I showed you where it was all about, in fact, I'll bring it up again. It was all about the changeover.
He predicted a dramatic drop in just the 10 years that are in front of us, 2020 to 2030, of going almost entirely to what's called Transportation as a Service [TaaS], using Autonomous Electrical Vehicles [AEVs]. Now that's a dramatic change in how we operate in our life, right? The idea is that it's going to become such a powerful economic incentive. Instead of spending, $5,000 a year on your gasoline and repairs and so forth, you're just going to pay a monthly subscription and just summon your car, this fleet car, and it's going to show up, and it's going to take you places. If you need an SUV, that's what you'll grab. It's going to be electric, which means a dramatically lower cost of fuel, and it's going to have tremendous impact on oil.
Very interestingly, it will also dramatically increase the amount of wealth in the world because it will save a trillion dollars worldwide in terms of cost of ownership. It will also increase productivity by a trillion dollars, so a two trillion dollars difference in these ten years. Now, that to me is a way of going green and actually saving or making money doing it. So personally, I think that the impact of technology is often underrated.
What Does This Have To Do With Water?
What does this have to do with us? With the water industry? The fact is, as Tony pointed out, that disruptions, and as I was saying to Satyajai in last night's interview, happened from the outside, right? Google and Android were never in the phone industry. Yet, today, they dominate it. It should have been Nokia, should've been Motorola, but it wasn't. And this is true. Look at Uber, taking over for the taxis. Uber was never in the taxi business. It was an apartment in San Francisco seven years ago. Then Airbnb, the list goes on. Tesla is another example with Elon Musk.
Outsiders are able to look at something that insiders take for granted and they can challenge it, right? So, he rolls out all these different predictions that he's made and he says, "Back then, I was insane. Now everybody knows it."
Now how does this relate to water? Well, Tony Seba is in the transportation industry and energy, and not in water, but the same lesson applies. Everybody in water kind of thinks things are okay. The only problem is that water quality is getting worse and cities are dealing with a broken infrastructure and so forth. I'm not going to repeat the mantra from last week, but essentially, it's going to the edge, where businesses are going to have to do their own treatment. That is a radical shift away from these giant central systems that the big water companies live off of, to these edge systems. These things are too small for the big water companies. They don't deal well with something that's $50,000, right?
So that's our specialty. Starts at 50,000 and moves up to about half a million, maybe a million. In the case of that island location, might be a lot more, 400,000 gallons a day. But typically, we're talking about stuff that's less than a million dollars per unit, and it requires a lot of agility and a new business model.
So let's take the next step then, which is we've got great technology, and you saw how Satyajai at Permionics is really going to put a lot of effort into making it integrated and work, which is fantastic. It's a marriage made in heaven and as you heard, he's sending us business. Every single month, we get an order and this is helping our Texas manufacturing. We're so grateful and I believe he's very happy with what they're doing. So, for these specialty water treatment systems, it's kind of cool that an Indian company is sending business to the United States to build stuff for the U.S. as opposed to building it in India and shipping it over. It means something in terms of the quality of work being done in McKinney, Texas and Marc Stevens and his team. But having said all that, that's the technology. Then we have the whole modular packaging thing, which is critical to this, but we're just one company, right? How do you spread it? How do you become disruptive? How do you break the old order?
We are wrapping up the current offering and here's why. We are ready now, we've been working on this for months now. Ken Berenger, our head of Business Development and Michael Mann who's our Mergers and Acquisition Specialist working closely with Bill Charneski, our water expert, and other resources, and what we're putting together is a way to rapidly replicate a simple business model in water. Not these water systems that I've seen, I've been living through these cycles, you book it in January and complete it in October. It's just not okay. That's not how we're going to disrupt the water industry. We have the right theory, but then we need that rapid concept, like Uber, it spreads rapidly. We believe we have that concept and that is going to be the next offering.
I will be fleshing that out in webinars to come. I believe it is huge. Key to this is the fact that we have in the past year and a half built a tremendous in-house funding capability where we have a very well organized, fully-compliant ability to raise significant money and now we're putting it to work to both acquire and build businesses. We realized that we don't want to raise two or three million dollars at a time. That's far more money than the company's worth. We want to spend small money in small chunks and rev up the revenues and thereby achieve that profitability that I was being asked about and also get a lot of market share rapidly. We think that's going to do all of it. We are very excited about it and that is the focus. But I want to caution everyone that we are wrapping up the current offering, which is really, really good for accredited investors. I just think the team really worked hard to make it the best possible offering.
If you want to get involved with water in a disruptive play in water that is I believe going to make dramatic changes happen in this decade, then you'll want to hear more about it. Now, last thoughts, and I saw this last night, but Marc Benioff, who's the CEO and founder of salesforce.com was trying to get help and he got some advice from Steve Jobs. Benioff says that Steve Jobs' advice helped him understand that, “No great innovation in business ever happens in a vacuum. A company that wants to achieve true scale," he says, "must seek innovation beyond its own four walls and tap into the entire universe of knowledge and creativity." Ergo, our Indian partner, Permionics, who's so smart and who is a very important player in India and who's now putting the strength of his company behind our technology and helping us roll out, hence this replication structure that we're talking about.
All this is where we're going in order to tap into knowledge beyond our borders. Finally, we have an amazing agency, AGMagency.com, which has come on board to help us dramatically drive business. And again, tremendous people are coming into our universe and helping us with the expansion of OriginClear. So, this is how you can contact us.
You can dial or email. So, dialing is Ken Berenger, Michael Mann and Devin Angus. All of them are very smart and helpful. I trust them implicitly. You can also email firstname.lastname@example.org. These are all ways to get to me and be sure to register for next week's webinar. So that concludes the presentation of the webinar. I'm going to wrap it up because it's been a long one, but I hope that it's been interesting to you and I'm going to keep getting better because I'm a one man show here and we're going to keep it that way because I want to have the immediacy and not have this whole overproduced kind of thing.
So if you'll bear with me as I figure it out. Oh, Keith Roesten says, “great presentation”. Well, thank you very much. It's very kind of you. We strive to do better. The email email@example.com will get to Devin who will relay it to me. When you get a newsletter, my CEO update, you hit reply and it goes to my inbox and I do my very best to answer, so don't hesitate to reach out. I love hearing from you guys. Thank you very much. It's been a pleasure working with you and I promise it'll keep getting smoother, but in the meantime, love you all and let's continue doing this work. Thank you and good night.
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