- Our strategic presentation proved it — we are now monetizing our valuable properties — one by one! This ideal model for Incubation is a smooth process with all the pieces in place… We're bringing a new asset investment to the world… And we have a Killer App — Water4Us™... So, how does that all add up? Find out in this briefing!
Transcript from recording
Show Host: OriginClear is a company that focuses on wastewater treatment.
Riggs: And hello, everyone. Welcome to the Water is the New Gold CEO briefing. Our mission is to transform the water industry.
Dan Early: Decentralization offers us this opportunity.
Financier: The plan that you've built here is super impressive.
Investor: The world is experiencing a crisis in regards to water. It's a great opportunity that you are giving us investors.
Riggs: The decentralization of water treatment means that we no longer need to establish giant water treatment plants, but.
Ken: Let them fight over the 20%. Let's work with the 80% that's untreated
Fund Manager: Over 21,000 unique alternative investments.
Riggs: 3 million jobs in the US alone.
Investor: Making it easy for the regular investor.
Riggs: All the old trends just accelerated.
Investor: Lucrative and fulfilling.
Dan Early: The vision I've got is to standardize these products design, build, own and operate.
Riggs: We have 65 people in the room.
Manuel Suarez: We got an important message to the world.
Company CEO : We can put a guy on the moon but our water is horrible.
Entrepreneur: Recycling all that water, it's a huge impact for the environment.
Tom M: Bringing new infrastructure in, drive growth in COOAmerica.
Riggs: That's a critical part of the picture.
Engineer: It's a twin 125 gallon per minute RO system.
Riggs: I don't think we're talking about a $10 Million fund. We're talking about a series of $10 million funds.
Show Guest: The opportunity itself is very big.
Investor: To live, Yes, take care of the water.
Investor: Not too many CEOs do a weekly briefing and are willing to talk to individual investors.
Wanted to welcome everyone to this briefing. It's going to be amazing. So much fun and I've got a ton of people here. So welcome aboard. June 30th, 2022 Briefing 167 And our new positioning is as The Clean Water Innovation Hub™, and you will see that shortly. Hey, Robert Baxter, how are you doing? All right. Good afternoon.
And we are going to cover our latest strategic presentation on the 28th of June. And I opened with this because this is what is staring everyone in the face, which is massive interest rate hikes, which are leading to a decoupling of the entire real estate marketplace and really unknown effects all around. So, what are we talking about? What we're talking about?
Start of presentation
Earn Generational Royalties
A new thing called generational royalties on productive water assets. But let's just take a look at the existing assets. Real estate, as I was just mentioning, is extraordinarily vulnerable. And it's it has feet of clay, which is everything is debt in real estate. Precious metals. They're fine. They're kind of not doing anything. Everyone should have them. But there's no income. It's not a great way to build a portfolio.
Commodities are high priced, but what's weird is now they're starting to drop because of demand destruction as we as we move into stagflation. So as the economy slows down. Lumber, for example, is down 60%. And so that's not, I was in commodities. I got out completely. Stock markets, same way I'm in cash. Why? Because it is completely overheated and it is dependent upon Fed interest rates being zero or close to it. And that's going to be over for a little while. Bitcoin. Oh, my God. Well, a lot of people who went deep into Bitcoin are getting margin calls or just they're hurting.
Ken: They're hurting.
Riggs: Hurting for sure. And on top of it, the exchanges themselves are potentially going to take your money away. It's not a pretty picture. Exchanges are very convenient, but they're also dangerous.
Water: Evolving Fast
Now, water. Meanwhile, for a century, clean water was a government monopoly. We've always considered like the money just comes from the government, gets treated by the government, and it's assisted by large companies that do the work for the government. That's changing. Why? Well, there's a growing need for water independence, which I will discuss further. But what does that mean, number one? Infrastructure. The very government infrastructure we've been talking about is currently running $75 billion a year behind. And the last remedy, which is the vast $1.2 trillion Biden administration bill, only allocated $55 billion total for water, which is not even a year's catch up. So that's a pretty sad situation. It's not going to get any better.
Now, people are becoming increasingly aware because of COVID and supply chain issues and so forth, very aware of that. Things could be shut down any day. They're being warned. So cyber attacks could shut down the Internet. All kinds of things can happen. And so people are hyper aware of what they took for granted is no longer so now there's also has been a migration mega-trend from the megacities to secondary cities. I'm talking about places like Charlotte, Tampa, Austin, and this has been accelerated by COVID. A very interesting trend. And. The corollary is that attractive land is often off the grid.
So, for example, we're seeing in Georgia, our own company is getting a lot of business from Georgia, which is trying to catch up with people moving to the Atlanta region from other places and having to try and catch up. These are municipal players. They're trying very hard, but they're not keeping up.
Ok, our innovation is private water. We see a problem of skyrocketing water and sewage rates. This is before the current inflation. Think about it. This is coming up to 2020 pre-COVID. It's gotten so, so much worse. People believe that water rates are regulated. They are not. They're kind of invisible. You know, my wife has a very small tutoring operation in an 850 square foot building, and she shares $125 a month minimum charge for water and sewer service. There's no getting out of it, no matter if she uses no water at all. So a lot of hidden costs in water.
Businesses want to take these costs in-house, especially in places like northern California. They're getting just destroyed increasingly, but they're not in the water business. They don't have capital for water treatment, and they certainly don't have the experts. The solution then is to turn water into a fully outsourced service. Our version is Water on Demand™.
Like Petroleum and Solar
Now, meanwhile, big water is behind this trend. They're still focused on becoming a bigger and bigger fish in a smaller, smaller pond, which is still billions, many, many billions. But they have to kind of stick with their model because going decentralized, going to the edges is a different kind of beast. They're not 50,000,000 million projects. They're million dollar projects. Totally different way to operate and these companies are not set up for it. American Water Works has $1,000,000,000 a year acquisition budget alone just to acquire companies. So that's kind of their game. And unfortunately, that's really in the past.
People still make water systems the way they build houses, you know, dig concrete in the ground, the whole thing. Technology adoption is hyper slow. We found this out a few years ago when we were proposing amazing new technology, but we learned that the horizon for adoption is ridiculously long and we run into this all the time. Ken and I, we get proposed people, I go to great technology and so forth. They just need they just need some traction and they don't have it. But they're wonderful. They just don't have traction.
Meanwhile, again, this business sector needs the funding that is not going to them through bonds or whatever. And that's where Main Street investors can now participate the very much the same way as petroleum and solar, which is what we call Water Like an Oil Well™.
Standard Reliable Solutions
All right. Now we're building what we call a scaling network. What is that? First of all, businesses just sign on the dotted line and get water treated and managed on the meter. No capital required. That's it. 15 year contract typically is normal with price indexing. We delegated all to a regional company that way. We're not trying to build a huge water company which is going to take another 25 years. Instead, we simply tap the existing water company infrastructure, the local water companies, wherever they are.
And we also plan to license our own amazing, prefabricated Modular Water Systems™ technology to standardize the fleet. And finally, we are contract managers, which means we don't want a lot of technology risk. We stick with what is proven. We found that something new is always something that loses money. And that is not our plan here. We just want to implement standard, reliable solutions, of which there are plenty.
All right. Let's take a quick look at how the flow chart works. Initially, investors invest in this water demand subsidiary, which is kind of like think of it like a like these master limited partnerships in energy. Very similar a basket of of properties. And sure enough, this subsidiary then inks a direct contract with the customer with built in price indexing. Now that contract is very important and it belongs to that subsidiary, which then commissions a system with a contract designer, a builder that does a standard job with re-use and the whole thing.
And that system is connected to the cloud. Permitting. Operation and maintenance and managing and billing of charges to the customer who then pays and shares go back to investors and partners. Full loop is closed. Everybody wins. And that is a smooth process that if all the pieces are in place today,
Now one solution for four challenges, first thing is, of course, meet the customer's water needs. The second one. Contractual limits to rising water costs for customers. Very important. This is key and it's getting worse. Investors are protected through real assets with real cash flows and their own inflation indexing that permits them to keep up with inflation. But also the customers don't have unlimited risk. It's the best of a bad situation, but that's what people are looking for. And finally, these clients, these companies, these companies, consulting engineers, all get their projects funded. And there are many of them.
All right. Let's take a quick look at competition. There's really two large categories. One is the existing legacy companies, which you see on the right. They do very little what we call waters of service or also in the water industry term design, build, own, operate, DBOO. Let's look on the left hand side because these are our truer competitors. Let's take a look at who they are. Seven Seas Water is, actually they own the Water as a Service® trademark but they specialize in very large whole island desalination projects as opposed to much smaller stuff. They do it on the meter, but they're basically replacing the municipality for that island economy.
Cambrian is in that small scale solutions, which actually, when you think about it, comprise the bulk of the marketplace because of sheer numbers. So they do much like us in terms of small scale, but they do not outsource the work. They do all the work themselves, which I believe limits them in terms of expansion and they get all of their funding, look at the bottom there, they are not direct investor enabled. They get their money from VCs. Fluent, great company, not really small scale. They're big guys. They do all their own work. Again, they are modular and again they do not work with direct investors.
So Water on Demand is the only one that is working with the bulk of the future business that is delegating all of the execution to an operating partner network, which is kind of our supercharger network, creating a barrier to entry for other people, trying to get in the space. They'll try to move in and sure enough they'll find out, Oh no, we work with water on demand, which is great. Of course, we handle all phases of water treatment clean water, dirty water and water reuse. We have the modular technology six patents that we have master licensing to. Of course, we're connected to the cloud. And most important of all, we are bringing this as an asset investment to the investors of America and eventually the world.
We have a killer app. We ran into this last couple of years where all of a sudden segments that I call human communities, really, these are communities that are forced to make sure that they have their own water self-sufficiency, like housing developments, like trailer parks, motorhome campgrounds, freeway travel stops, hotels. We already have a number of customers already in these areas who are paying. What we're going to do with this is simply putting the icing on the cake by adding Water on Demand to accelerate the adoption. Make it simpler. So it's a full acceleration.
Long Term Returns
All right. Full picture here. Very important that all of the needs are fully outsourced. So therefore, these clients do not have to worry about the details of water treatment. That's even more important than not having to come up with the capital is to not have to manage a whole new cost center. Secondly, there's this interesting, self-sufficient water for human communities concept and growing asset portfolio. Why? Because we do not sell these systems. We keep them in our ownership and therefore our investors ownership and creating a growing asset base. Long term investment returns for the investors ultimately, because these systems, even though individual contracts might go 15 to 20 years, the actual equipment can last up to 100 years. And so you get a very long term return on investment.
Our chief engineer, Dan Early, has been a early pioneer in decentralized water systems. He did it, he was doing it before. It was a thing 20 years ago. Today, it's it's all the rage and he is being recognized as a guru of the space. We are planning to listen to Nasdaq from our current penny stock location. And finally, we are all about eventually packaging the money streams, using the blockchain to streamline them and potentially create marketplaces. So this is a complete vision of the future.
The Clean Water Innovation Hub
Now let's take a look at OriginClear's evolving role. You have to look at where we've been. We've been a company that keeps packing more and more value and more and more value, more and more value as a result, constantly raising money to do more, do more, do more. And while that resulted in a lot of value, it also resulted in a kind of a focus like, what the heck are you guys? And you're always raising just enough to do the next thing, but not enough to make everything succeed.
Incubate and Launch
So we looked at that and we realized a better model is to actually do the job of incubating, because crowdfunding has become mature enough that you can build entire companies with this. For example, regulation A The very amazing success story of KnightScope on Start Engine, which raised $110 Million using unaccredited investor rounds and is on the Nasdaq. So that is a mature way to use wide public marketing and not to be hostage to the endless due diligence of the PE funds or whatever.
Just go ahead and raise the money. And that's very smart. The second thing to point out is these are single ventures and I'll discuss that further. So in terms of rollouts, we're focusing on Water on Demand with the Water4Us™ initiative. Next year, we're looking at doing $H2O®, which is our our trademark for the packaging of dividends into a water coin, ultimately creating an asset based package that could be traded, eventually creating a world marketplace for the very first time in water.
Now, you notice this strange term, EveraMOD™. We're basically looking at EveraMOD as the brand name for our line of pump stations, which is about the most boring thing on the planet. Literally, pump stations move water from one level to another level higher. Pump stations are clean water, life stations are dirty water. And we've got a growing business in pump stations with national accounts growing. Why? Because ours are super durable. The million plus pump stations in America are all falling apart and we are now replacing the entire installed base. We're the preferred choice for so many customers today.
So we decided to pull it out, make it a new business unit, and eventually spin it off as its own thing. The year after that, the parent Module Water™, which EveraMOD came out of, we plan to take that out to to the through the crowdfunding process. And finally, good old Progressive Water Treatment, which has built custom systems for very large customers and managing cities and so forth, so many good things. And has its own intellectual property base will eventually go out. That's five properties and then going forward, more incubation. So OriginClear is kind of is going to kind of be in the permanent launch pad mode.
Hitting the Inflection Point
So I've just discussed that, Water on Demand launched, $H2O, Modular Water Systems, Progressive. What are we? We're a change agent. We're this 14 year small, scrappy, small public company that somehow survived and our investor base, there's none better. I remember when Ken Berenger came on board in 2018 and went to work talking to those customers, and he was blown away by the fact that these customers, despite having waited a long time, were strong loyalists and believed in our vision. And since then we've done the right thing by them and they continue to do the right thing by us.
Change Agent fore Water
We have proven that we can raise money from the retail accredited investor. Why is that important? Retail accredited investors can be reached with marketing. They can be pitched one on one. They don't have a three month due diligence for you and they don't sell their shares. Very few of our accredited investors are sellers. They hold, they are true believers, they sre long time holders. And we have justified their faith by making sure they did not get crammed down as long as they stuck with us.
Our production facilities have a sterling reputation, really amazing, and as a result, the business is growing. Obviously, we know how to roll out new ventures. 2018, for example, we launched a Modular Water Systems which just in May had a month of purchase orders. That was as much as the entire year of 2021. That was the venture we launched in 2018 and finally in 2022 is really starting to move fast. Notice how long it takes. This is the water industry, but once you hit that inflection point and you start, the hockey stick, it really takes off. And that's what we're seeing. We have experience in various areas which are critical to being a launchpad.
Path to Nasdaq
All right, so we're the mothership, which means we provide all the centralized services. And that way the business units can stay, specialize on what they do. And this is smart because it provides revenue for the mothership, but it also means that all the best practices are kept in one place and shared, and the businesses can just do what they do best. The OriginClear investors benefit from our having a major stake, the largest stake we believe in each one of these spinoffs going forward. It's kind of like how Yahoo! Was saved by having a large share of Alibaba. They fell apart, but their ownership of Alibaba really saved the investors. So OriginClear will multiply its value over time as these launches occur.
Now, this is important. Separation of ventures means that if one of them doesn't do well, let's say the pump stations fall apart, nothing much happens. They kind of sit around and do nothing, no big deal. This is very similar to what happened with Microsoft, where they failed with Microsoft Money, they failed with the Microsoft Phone, they failed with a whole range of things. But that was okay because these business units were independent and didn't drag down the rest. And so they were able to just be exert a Darwinian selection and move on. And even today, they have very good successes. One Drive, Teams, there's a number of things that have worked well, but we forget that they've had a lot of failures and yet they have succeeded. So that's very, very important for us as a launchpad.
And finally, we do plan to list on the Nasdaq ourselves because the water industry needs an incubator. There really is none. It's sort of right now, the incubation is if you're, if you start a water company in 30 years later, you're still alive, then you'll get bought up by a big guy. That's the incubation process. It's kind of lame.
Like Y Combinator
So with that in mind, we're kind of like the industry success on Silicon Valley, which is Y Combinator. I'm showing you there what happened in with Airbnb. They only made 440,000% on their investment. We actually plan to cover more of the waterfront and to go all the way into more of the rounds. But we we own that beginning, that super profitable beginning and then continue on up from there. So that is really what we're about.
Modeled After MLPs
So our first incubation is complete. We are, we've launched Water on Demand, Water Like an Oil Well, where for the first time ever, everyday investors can earn generational royalties from private water systems. It's modeled on the oil and gas MLPs space, which was launched in 1981, is today a 300 billion plus marketplace. Very viable and everyday investors can invest in it. No more massive central systems. This is the future smaller end point water treatment businesses doing their own water treatment and by the way, saving water by reusing the water, which unfortunately the central utilities never do. And we now have initial funding in place for the first commercial pilot program.
All right. Let's quickly take a look at the team myself. I have a background from the dot com being a disruptive marketer and having kind of learned on the battlefield of the dotcom, year 2000 crash and going forward. Long before that, I was a ship captain and had my share of adventures in the Atlantic and Pacific, and that I think is a good mix to be able to react to the unexpected.
Ken Berenger, of course, is not only the co-creator of Water on Demand, but he helped design the $H2O water coin concept, which is in our future. He has brought us an amazing amount of banking and Salesforce training experience, and he continues to know exactly, he's very adaptive, and I think that's the main thing to know about Ken, is that he knows how to roll with the punches, which you'd better know how to do in the finance world today.
Andrea d'Agostini showed that he was able to grow a very large company, American Power and Gas, which has done an amazing job of building a franchise. And he is working on doing the same thing here.
Tom Marchesello came out of Air Force Base Command, worked in product marketing, went on the buy side in the investment banking space, and also worked with the Chicago Mercantile Exchange on Bitcoin actually back in 2015, believe it or not. So he's been around for a while and that's where I met him actually was in the crypto space.
With him is Dan Early, our Chief Engineer who is really a guru in the area of structurally reinforced thermoplastics, basically very, very tough polyethylene systems. And he is, not only is he a great engineer, but he's well aware of the need to communicate the value of what is done because engineers kind of like they kind of let good work speak for themselves. But he's great at communication. We appreciate that.
Prasad Tare joined us about a year ago and he has really brought world class audit experience and financial management to us, which is well needed and will be part of our Nasdaq path.
Marc Stevens is the long time president of the company we acquired in 2015, which has just an amazing reputation.
Now, let's take a look quickly at our historical performance. The existing operating units and going forward, looking at rest of water, we see starting in 2019 through 2021, roughly if you combine the green and the blue, roughly a $4 million a year run rate, pretty static, really, $1,000,000 a quarter. That changed in 2021. Things really took off. We had a tripling of orders in 21, which are today driving a 50% increase in revenue. Remember that orders turn into revenue over a long period of time. Why? Because just like building houses, you've got to build the water systems and it takes months and years.
Progressive Water closed a $5 million deal in August with a large utility in the southwest, and that is going to take about two years to fully deliver. And that's kind of the way the cookie crumbles. But it's great because it builds a huge backlog of paid business. You also notice in 2022 we are planning to separate EveraMOD from Modular Water Systems because they're starting to grow national accounts. And so what's great about Modular Water is it's been doing these numbers $1,000,000 in 2021. This is revenue expected $1,500,000 or more in 2022. I think that's conservative partly because we've broken out the EveraMOD part which otherwise would have made it more like 2.2 million.
But the point I'm making is there's only four people in Modular Water. So it's a very efficient operation and their order growth in 2022 is going to continue to drive the growth of both the pump station business and the Modular Systems business.
Strong Gross Profits
And you see that in the next slide here where a history of zero or slightly negative gross profits turn into very strong gross profit numbers last year, adding up to over $1,000,000 in total. And that trend will be continuing going forward. So very nice look at the business. And this is these are the these are the businesses that already do work for us today.
Very Nice Picture
All right. Now let's take a look at the consolidation of everything, including the new starting with, of course, Water on Demand. Now, the growth of water demand is driven by a the amount of capital raised and B, how many machines we can put into service, remembering that we have to select the projects and select the partners.
Fortunately, we have a an operating partner in place. We have the capital, we have an excellent general manager who is has managed very large high end projects in the past. And we are currently qualifying multiple candidates for the first commercial pilot. As you can see, Water on Demand starts negative, of course, because that's where we're spending money. But then it starts to make some serious money.
And look at this. It's making top line, about 90 million, of which almost half is operating profit. Why? Because it's pure finance. Right. This water hardware is low margin, but Water financing, if done right, is very nice margin. And out of that, 25% goes to the investors. And you notice that the investors represent about 10% of the gross. So the royalties are 25% of net profits. And it looks like from the pro formas that they will be about 10% of the gross, which is very nice picture.
Water on Demand is really the gorilla for all this, as you can see. All the other units being rolled out only add about $30 million to the total in 2026. They're essential. Why? Because they provide a lot of technology value add, and they simply are a different kind of business. So they have a nice blend. But as you can see, 2022 and 2023, we continue to have losses, but they dwindle and and we're looking at profitability, operating profitability in 2024.
Now, by the way, I might say that OriginClear itself, the mothership, does not plan to have fundraising. It will not need it. Why? Because, A, it's got profitable businesses, as you saw. And B, it gets from the businesses it exports or launches, it gets management fees. That combination ultimately will lead to are not having to raise money for OriginClear itself and simply raising money for the individual ventures, which is very healthy.
Okay. Let's take a quick look at the offering then. The forecast again is 90 million over four or five years, ending up with about 400 systems. That's our plan based on a model with sort of blend of machines, water usage fees, which include inflation so that there there is value. We're not being excessive, but at the same time, we're getting good return on capital. And of course, this all depends on the availability of capital. The first chunk really is $20 million with the goal of a $300 million total, which we will discuss further.
Importance of Project Management
Where is this all going? Well. Majority of it is going to fund these capitalized water systems and the rest of it goes to build out infrastructure. Infrastructure. Remember that if we're delegating work to water companies, well, we better make sure that they succeed. Otherwise, guess what? Money doesn't come in from the customer. So it's very, very important to be good at enforcement, contract management, project management, really being on top of performance and applying remedies, effective remedies to make sure the customer wins. And therefore we do too. Okay.
Let's take a look at what the offering looks like. Investors currently in this new offering get a 25% long term royalty on the totality of what they invested. So let's say they invest 100,000. They get 25% of the net profits from that 100,000 being invested in Water on Demand, pay per gallon.
Additionally, they get 10% of the new company, the private company only, but they, only the first $20 million investments get to share this. And by the way, we're down to only $17 million left. That is dilution protected. So as Water Demand Inc moves forward and eventually becomes a public company, that 10% will remain 10%. That's super important now because it's so early. We're still getting our first pilot underway and so forth. We sweeten the pot in a big way by giving investors preferred stock, that is, stock that is protected from price drops because you only you convert at the price at the later price, whatever it is.
Technically, 150% of your investment, actually, it's 165% for a short time, which means that you invest 100,000, you immediately get stock worth hundred and 65,000 and you get double warrants, means two more opportunities to buy at the same price with a strike price of $0.25, which is very good for your upside. So to summarize, basically you make far more than your investment and you have long term opportunities both from royalty income as well as a piece of the new company.
This is summarized here, which I won't go into, but it's basically covers the investing benefits. You are founders today, this situation will not last. That 165% goes to 150% and all the way down to 100% over time. There's also an escalation for multi million dollar investors getting more percentage. So we do favor large investors, but right now we're doing a fine job for accredited investors who are taking the leap today and they're getting 165% is what normally a $5 million investment would get you. And we're, this is, because this is the moment before the pilot starts, I strongly recommend that investors look at this as being a very strong 15% bump on top of the existing 150, which itself will go down.
Sure enough, that 165% will expire soon. There is a cap on convergence which is very useful. We knew that no matter how high the stock price goes, you will not get fewer and fewer shares if you wait to convert because there is a maximum price. This is very useful. But by the way, that cap will rise. Also the filing shares again limited. It's close to $3 already allocated today.
And we would like you to simply go to originclear.com, click invest for the full information and to schedule a personalized briefing with the very amazing Ken Berenger. Or you can simply go to oc.gold/callken or call him either way, join us and invest in the new asset class water. And I'd like to thank you for joining us.
And here is a regulation D disclaimer which spells out the parameters of the investment. And we look forward to your questions and to working with you in the long term.
End of presentation
Working with Enthusiasts
So we still want to work with the enthusiasts. We don't want people who are highly conservative and want to talk for eight months about the you know, we want people who are really early adopters and excited about making a difference, but we're able to put more depth into the conversation. And I think that's very beneficial. It's really working and I'm glad that everybody can hear me. A lot of people are commenting and thank you for your patience. All right.
Why its Time for a New Asset Class
There's a small segment here before we get to the the the conversation with Ken. And this is about why it's time for a new asset class, because of inflation. Take a look at this. You remember we showed the water rates in that video, which basically get to about triple of inflation. Kind of ridiculous, right. Well, let's take a look at how it's been updated since then.
This is an update that takes us all the way up to about, looks like about May, April, May, something like that, and March 2022. That's where it goes. So you can see the different categories, hospital services being the worst college medical services and on down, hourly wages rising, but not fast enough. And you see the food and beverage really in late 2020 kind of kicking up.
Let's take a look at it right there. See, this is to late 2020. It's kind of going up like this and then it kicks up.
This is the current inflation we're seeing, right? It pops up. And after late 2020, this is the phenomenon we're seeing and it's not really hourly wages are not really catching up. Notice how new vehicles popped. These are all things that you're aware of, right? Other categories like TVs. Well, TVs are getting cheaper and cheaper, but unfortunately, you can't eat a TV. Let's take a look.
Then I overlaid the previous graph onto this one starting in 2009. There it is using that same trend from before. And then here's where it kicks up. Watch this.
Well, if we're tracking with what it was doing with food, this is where it's going. So now this really creates a hidden inflation. Nobody's really tracking water rates. Why? It's governmental. And so we have a problem here, which is that people are suffering from water rates and sewage rates. For example, in Los Angeles, there's people in LA that have a $15,000 a month water bill because they have a bit of land and they suffer. It's how it is. Obviously, if they have 15,000 a month, bill, they have a decent setup, but still it's kind of ridiculous. So that kind of brings us up to speed and I thought you'd find that very, very interesting.
And so water, sewage inflation is a hidden tax worse than food. And with that, I'd like to bring the amazing Ken into the room. You're on, my friend.
Water Rate Risk
Ken: Can you hear me? Just making sure my mind works. Okay. Very good. Okay, very good. You know, it's funny. I just looked at that graph. I did a quick screenshot while you were doing it because that's it's powerful stuff. When you look at how rapidly water and sewer rates are rising compared to, you know, you don't ask people. People complain about the cost of meat, but you don't go, what? How is your water and sewer rates? You know, they don't really it's not something it's kind of a background pain.
But if, you know, here's the thing. And you mentioned the $H20 token and we'll get into that at a later date. But tying that to pay streams, creating a secondary market, creating a way to hedge. Water rate, water rate risk for high water users as a business is almost as dangerous as fuel rate risk is for airlines. And airlines can hedge against it. But other businesses that use massive amounts of water can't. And it could literally be it could it could kill your business.
Riggs: Charles Walker says, "My area's rates are really rising significantly so people are aware of this." Absolutely. Gene Tully says, "I think you have your shit together and it's an amazing investment opportunity." Well thank you, Eugene Tully. He's asking, how is your PA sub doing? Oh, that's the subdivision.
Ken: Yes. So I'm doing a little work. I'm doing a little bit of due diligence. You know, the mortgage on the property just went up like $2000, $2000 a month. And in fact, I'm calculating how long it's going to take. So it's like three years at 2000 bucks a month. You know, I'm I'm still very bullish. I'm probably going to do it. I'm just um...
Riggs: But it's only going to get worse.
Ken: I thought I was gonna take some money out of my crypto account to put a down payment.
Riggs: Your crypto gains!
Ken: And I looked and I said, but I had money in there. I had a lot of money in there. Yeah. So there's a, there's a look, I'm experiencing and I laughed with a couple of investors because I said so, you know, you depending on your crypto, you depending on your stocks right now and and we kind of all grumble universally and I go, look, you really can't even go to cash. I'm going to cash is like the alternative. But even with cash, you're still probably giving up 20% a year, which is better than the 90% I gave up in crypto.
Riggs: Gene says, "You'll make your money. Not to worry." So take that my friend.
Ken: I'll make my money. Yes.
Riggs: No, but it's because, you know, it's a fantastic concept of this self-sustaining development, 50 acre development with energy, water. And even, we even add a little victory garden there, you know, World War Two, that that would potentially have...
Ken: It's a luxury agrarian community.
Riggs: That's kind of the same concept as glamping, glamour, camping. Right.
Ken: Only you live there. Only you live there.
Riggs: People forget that agrarian means getting up at 5:00 am to do stuff.
Ken: Well, no, someone else does that because it's luxury. Luxury agrarian community means you live there and hire somebody to get up at 5 a.m..
Riggs: Well, and the idea is to not not have the the cattle or the chickens anyway.
Ken: And be self-sustaining. And to be self-sustaining.
Ship has Landed
Riggs: Well, of course you have to be self-sustaining. With that, I wanted to just say that, it feels to me, I was watching the presentation, it feels like things are just kind of settling in. And like the whole thing is, the ship has landed, we've kind of resolved all the burning questions and kind of all the pieces are starting to just.
Ken: How we got here. It's kind of almost like the origin story, if you will. Right. And that presentation is so wonderful and it's so utilitarian. We really didn't even lean in on the fact that we're creating the world's first asset class that's going to be wrapped and accelerated by a fintech. Right. Like we, didn't even we didn't go there. Right?
Riggs: Yeah. The word fintech has not been inserted in this presentation, which I will do Ken.
Ken: I wasn't suggesting, I wasn't. Was that, was that a reminder?
Riggs: You're so funny.
Ken: That's like my wife.
Focus on Enthusiasts
Riggs: Yeah, exactly. Yeah. Honey do. And yeah reap what you sow says Gene. Well, anyway, it's been great looking at that, fascinating about that graph extrapolation. I think we'll we'll work with that some more. And listen, it's coming on the heels of the visit to London, where we really learned that people are excited. And we really decided to, however, to stay focused on enthusiasts. We want to work with people who are personally invested in the concept, want to make a difference. It doesn't matter how much they invest, it's that they are there.
I talked about the importance of retailer credit investors being super loyal, being enthusiasts, and that's really been the strength of the company. So I want to thank everyone who is an investor in this group because I know a lot of you are regulars and that we will continue to appreciate you. And then as we go forward, we're going to bring in more people who will keep adding to this amazing movement that we're creating.
Individuals vs. VCs
Ken: I want to share, remember what I shared with you today in our meeting when I said, you know, London, the big money already understands what's going on, but they still have that, they still have that cool detachment. I mean, they really love the idea of doing beneficial investments that they actually make money on.
But there's that still cool detachment. The experience I had over the last 2 to 3 days when I spoke with individual investors, you know, V.C., family office money, they're great people to work with. But it's kind of like, well, of course you're bringing this to us, right? Like, in other words, don't you know who we are?
But the individual investors that I spoke with this weekend, I won't name their names, but they know who they were because they remember it was like two days ago, every one of them had an excitement and they were like, you know what? Thank you for, first of all, taking 50 minutes to kind of lay it out the way you did. You took about 40 minutes to do that. Thank you for taking the time to really explain this and drill down for me.
But also, you know, I really appreciate the fact that you guys are offering this to guys like us, you know what I mean? To, you know, basically to kind of the regular, more affluent but not institutional investor. Right. Because they don't get those deals. They just don't.
Riggs: Well, and it was this a discussion we had a while ago about we don't want water as an asset to be owned by one Jeff Bezos, but to split Jeff Bezos into 10,000 investors is still a lot of money.
Riggs: Tom Liakos says, "Thank you." And we're going to wrap it up because it's almost an hour and I try to keep these things down. Oh, loquacious. Loquacious. What a cool word, huh?
Ken: Verbose or verbose?
Riggs: Yes, we can go there. We love, we love the sound of our own voice, which is a feature, not a bug. Thank you all.
Register for the next Insider Briefing: HERE