Did you know there's a booming trend happening in America? And it directly connects with our Water on Demand business model. It has to do with the privatization of water...
Unlike other assets, water is just beginning its run, which presents a unique opportunity!
Find out here in the replay.
Transcript from recording
News Show Host: OriginClear is a company that focuses on wastewater treatment.
CEO OriginClear — Riggs: And hello everyone. Welcome to the Water is the New Gold CEO briefing.
Riggs: Our mission is to transform the water industry.
OriginClear Chief Engineer: Decentralization offers us this opportunity.
CEO Manhattan Street Capital: 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're giving us investors.
Riggs: Decentralization of water treatment means that we no longer need to establish giant water treatment plants.
OriginClear VP Development: Let them fight over the 20%. Let's work with the 80% that's untreated.
Investment Advisor: Over 21 thousand unique alternative investments.
Riggs: Three million jobs in the US alone.
Investor: Making it easy for the regular investor.
Riggs: All the old trends just accelerated.
Investor: It's lucrative and fulfilling.
OriginClear Chief Engineer: The vision I've got is to standardize these products. Design, Build, Own and Operate.
Riggs: We have 65 people in the room.
CEO AGM Agency: We've got an important message to give to the world.
CEO PhilanthroInvestors: We can put a guy on the moon but our water is horrible.
Pool Cleaning Technician: Recycling all that water, it's a huge impact for the environment.
COO OriginClear: Bringing new infrastructure in drives the growth in America.
Riggs: That's a critical part of the picture.
Progressive Water Engineer: It's a twin 125 gallon per minute RO (reverse osmosis) system.
Riggs: I don't think we're talking about a 10 Million dollar fund, we're talking about a series of 10 million dollar funds.
Overseas Partner: The opportunity itself is very big.
International Investor: You want to live? Take care of the water.
Investor: Not too many CEOs do a weekly briefing and are willing to talk to individual investors.
And hello, everyone. Welcome to Water is the New Gold. So many exciting things happening that it's a good thing we do these things weekly. And Robert Baxter says, "Hello from Robert in New Jersey." This session is going to be highly interactive, so we'll be presenting some new concepts here. And I want you to feel free to chat. Use the chat. Right.
So with that in mind, Water is the New Gold. Water on Demand™ is the Prime Innovator in the Emerging Private Water Utility Sector. Yes, we've identified a sector now that's come out of our research. We have some very smart people working on this. And I'm going to be laying out for you. First, we'll have a couple quick videos, as you know. But then I'll be laying out how things transitioned from 2016, which was what I call decentralization, 1.0 to What's 2.0?
Which well, you already know what it's going to be pretty much because it's about this private water utility sector, private water utilities. Is something that I believe will take over the world. And it's all about who is going to lead. Who is going to scale up the fastest? A few weeks ago, I presented a video about Inside The Tornado where a technology jumps the chasm into wide adoption and then goes into a tornado of adoption. That tornado is entirely based on how fast can you get seats. In other words, clients, users.
That's, seats means software users. In our case, how fast can we fulfill the demand? By definition, you cannot have a single company meet the entire demand of a tornado. The smarter thing to do is to be one key element of this tornado adoption and to farm out all the other elements that might slow you down so you remain key. This is what Uber did. This is what Airbnb did. They just did one thing and did it really well. Didn't try to own anything. Airbnb to this date is known a hotel. Uber to this day does not have a fleet of taxis. They could, but they don't. All right. So it's very important to be that really core thing so that expansion can be unlimited. And that, I believe, is our difference.
All right. With that in mind, quickly, I'm going to just tell you that our Safe Harbor statement is all about how we do our very best to tell you like it is. We have data as we go. And I think you've learned by now we tell it like it is.
All right. So what I'm going to do now is I'm going to do a quick excerpt from a podcast that was done, and you'll see some of our thinking here. Sit back and enjoy it.
Start of new Water on Demand video presentation
Hi, I'm Riggs Eckelberry, co-founder, chairman, CEO of OriginClear. The government needs to continue to provide a lot of abundant clean water. But what happens to it after it's used when it's dirty?
Do you know that 80% of all sewage is never treated, it's just dumped? That leads to water scarcity, but it also leads to a lot of disease and pollution and the ocean turning into something horrible.
At the same time, the cities and counties are not getting the funding they need to really treat the water and so they can't keep up. The solution is let the people who use the water clean the water.
Water on Demand is a way for regular investors to invest in water systems that are built at the local business, industrial, agricultural level, not the big central systems, but rather this new breed of private water treatment.
Let's say you're a brewery and you're you're making lots more beer and therefore you make lots more left over water. Where does it go? Well, the cities are saying that's too much. We can't take it at the brewery. They're not in the business of water treatment. This is brand new. And so they need a solution. Also, they're not experts. You're going to ask them to hire a water expert. That doesn't work either, right?
What we have is a solution which is Water on Demand, which means I need water treatment. Boom, you get it? No need for capital, no need for maintenance. Just sign on the dotted line. Machine shows up on your site and it's maintained and it treats the water. We have opened up investment in these water systems to the general investing public.
We're charging these people on the meter just the same way they're used to with the city. Right. But it's not the city doing it anymore. It's the business. Business loves it. Why? Because if they treat the water themselves, guess what?
They can reuse it, they can recycle, they can get more water for their money. And now we take care of a lot of the scarcity problems. So this is a solution that solves so many problems in the water industry. In today's economic climate, you want to get away from just holding onto dollars or even holding on to gold because gold doesn't earn money, right?
Water on Demand is investment in actual capital assets that earn income. But think about it. If you can get a tangible asset and make royalty money from your tangible asset, then it's the best of all worlds. Lots of assets out there. A lot of people know they need to invest in assets, so therefore assets are skyrocketing in value. Crude oil, precious metals, commodities of all kinds, lumber, you name it. Water has only begun. It's the beginning of the run for water.
Water on Demand is the first program to enable investors like you and me to get into an asset. I believe it's a once in a generation opportunity to make real change with our health, water and also to take advantage of the development of an asset that will throw off revenue and, I believe, increase in value tremendously.
The first thing you can do is to sign up to hear my weekly briefing. It's every Thursday night, 5 p.m. Pacific, 8 p.m. eastern. Just put oc.gold/CEO in your browser register for the briefing. If you can't make it to actually watch it, you'll get the replays automatically.
But week by week you will hear about this amazing program being developed in real time and you will be in on something exciting whether you invest or not. You will be in on this heartbeat of an activity that I think is is just phenomenal. Obviously, I love it. I'm one of the people who helped develop it and we have a lot of work ahead of us. We want you to join us because it needs to become and I believe it will become a movement. Stay tuned and I look forward to hearing more from you.
End of presentation
Andrea. Hey, my friend. And Ken's on board. Ken. Whoa! Dude. Yeah.
Ken: Okay. Okay.
Riggs: Oh, Lord. The the zoom.
Ken: Was like an 80s music video for a second. Okay.
Riggs: Yeah, right. And Emily Angus says, "Amazing video." Dave Johnson wants to ask, "Where did you learn to write backwards?" and that he loves the new lead in on WOD, by the way. And of course, Andrea thinks I'm absolutely wonderful, so that's great. But that's not all people. I'm actually going to continue with the actual podcast, and this time I promise not to interrupt things by responding to chats and so forth because it just doesn't work.
Keith Roeten, "Whoa." James Wright. "Max Headroom." Yes. You know, you had to be there in the eighties, James. That dates you. You know that. Keith says, "This definitely covers all of the needs and problems that arise with everyone's necessary usage of H2O." Very well put. All right. So let's let's see how I defended myself with the Upreneur podcast host. Very, very good podcast. So let's take a look here.
Upreneur Podcast Hosted by Jeremy Straub
Jeremy: You are the founder and CEO of OriginClear. And as I was reading and going through the company, I was curious on how you even, because you're considered a pioneer in the battle against global water crisis. And I think global water crisis and I think a number of different pieces that go along with that. And so I'd love to hear your opinion on what you think that global water crisis is. And then I'd love to dig in a little bit more into your story of how you've turned that passion into a business.
Riggs: One of the things we learned about the water industry is that it's very resistant to change, and probably rightly so. They've got public health concerns and so forth. But, you know, you remember the taxi industry was very resistant to change. The hotel industry was very resistant to change. But things happen to completely upset the apple cart. And there's still a hotel industry and there's still a taxi industry, but there's a whole new game in town, which is a paradigm shift for those sectors, and I think it needs to happen for water.
It's kind of interesting that we don't have the equivalent of an Airbnb or an Uber in the water industry. Why is that? How come it's all still so conventional? You know, we see industry analysts go, well, put money into an ETF. I'm like, that's brilliant. You know, you don't have the Stripes, you know, or any of these hot fintech things, for example, happening in water. And yet it is today a $1 trillion worldwide industry that could be a $5 trillion industry because in the world we only treat 20% of the sewage and that is a scandal.
Jeremy: Talk me through a little bit about this, because as I was preparing for the interview, I was talking about the concept of recycling water. Right. And obviously, a lot of the water in the United States, we just throw into rivers, oceans in that after we've used it. And there's other countries that recycle the water. And it's something I've never actually thought about, of being able to clean the water, reuse or recycle it again. Is that kind of the core part of your business and that idea of using algae and sewer to be able to recycle it? Or is that just kind of a portion of how you're thinking about how we can be able to reuse water and thinking about how we as a country are evolving and how we're utilizing it?
Riggs: There's this famous figure that Israel recycles almost 90% of their water. The number two in the world is Spain with 20% and the US is at 1%. Now, why is that? It's because it's just like the energy industry. Old grids prevent innovation, right? The way we built our municipal water systems is one way. Treat it and dump it. Now we do treat our water. I'm not saying that the US doesn't do a decent job with it. Sewage. When I say 80% of all the sewage in the world is not treated, it's mainly because of Bangladesh and Africa and places like that that don't treat at all. In America and Europe, you know, we do a decent job, but we've got to set up so structurally, if I'm in Beverly Hills and I dump a bunch of of waste, it goes to the El Segundo Wastewater Treatment Plant, gets treated and goes into the Santa Monica Bay. And that's the end of that. It doesn't go back uphill to Beverly Hills. It's just not designed that way.
And so the only way that we can do it is pretty much the way it was done with cell phones, which is bypass the whole structure and just go, you know what, we're going to have people treating water in Beverly Hills. And because they're treating their water in Beverly Hills, they can reuse it themselves. And eventually, once they've gotten to the logical limit of reuse, they can send the rest of it down to the city, treated, which is a big deal because one of the the unknown scandals of today's infrastructure is somehow water loses out.
It's a weird thing, but we're we're going to do bandwidth and we're going to build roads and bridges and so forth and all these trillions of dollars. This current administration allocated $55 Billion for water infrastructure, which is less than one year's catch up. Right. So the federal government is out of the water industry, business. It's given up and the 150,000 municipal water systems that we have here don't have the money, can't cope and of course, industry keeps growing and people are building factories and everything and and the demands increase. And by the way, the EPA keeps tightening requirements, rightly so. And so the municipals are caught in a squeeze. No federal funding. They can't raise water rates fast enough because that's tough on populations. They have growing industrial requirements and increasing regulatory requirements.
And so what's happening is we have a silent, essentially loss of capabilities, which you see in places like Fort Lauderdale with the broken sewer mains, right? Yeah. You've heard those stories. And why is it so? It's because and this is not just Fort Lauderdale. It's a bunch of places all over America. The the sewage systems and the treatment systems are getting way, way obsolete. So what's the solution? The solution is not to go well, we need $20 trillion. A. It's not going to happen. B. It takes too long and C. There's a bunch of NIMBYs out there that don't want a sewage plant next to their home. So it's not going to happen. The solution then is to promote self reliance businesses, industry and agriculture doing their own water treatment.
Jeremy: So talk me through how your company helps solve that.
Riggs: Back in 2016 is when I first started getting that decentralization bug. There was a key piece of research done by Lux Research, a very good organization that laid out the new decentralization trend that had been evident for about five years and that it was happening. And one of the points they made is, look, more and more capability at the edge means you don't have to have a big capability at the center, which means what we've got is fine because they're only treating treated water. So that problem goes away. And so I became a big apostle for that. And I started writing in the water trade magazines. I started talking about it. Nobody paid attention. Nobody paid attention. They were like, yeah, I flush my toilet, it goes away. What's the problem? Right?
Most consumers have no idea there's a problem and businesses do know there's a problem, but it's not very well publicized. And so what's happening is it's kind of a an unseen trend. And of course, for a public company, you need visibility, you need people to know what you're doing is important, but nonetheless, it is a trend. In 2018, we acquired a technology modular, prefabricated drop in place technology protected by a whole variety of patents. And that is perfect for these business deployments because businesses are not in the water industry, they're in the beer industry or the chip industry or whatever. Right? They don't want the problem. They just want it to go away. For them, it's just like a fridge. They just do your thing right.
And so, so these things are prepackaged, they're, they're mass produced, etc. and that's become very successful. But even so, it's not fast enough. There's not enough transformation happening. There's a tremendous demand. We have a huge backlog of business and when COVID hit, we had to figure out what to do to speed things up because like everybody else, it precipitated a lot of self reflection, like, what the heck are we doing here? We had to look at our business model because in early February, I don't know if you remember early February 2020, investors were freaked out about the price of crude dropped because all of a sudden Wuhan hadn't used any oil for a month and an investor was like, whoa! And we went, Whoa.
And it started for us, a very intense period of analysis. Like what could make this huge? Long story short is we realized "It's the money, stupid." If you pre finance systems and I say, Jeremy, for your business we're going to put in a water system. You don't have to pay a dime upfront. Just keep paying on the meter like you're accustomed to, but you're going to pay it to us, the old SolarCity model. And we'll take care of all the maintenance too. You just go on about your business. Now that is going to get wide adoption because just sign on the dotted line problem goes away. And there's been some good success stories already in our industry for that. So that's where we realize this is our new mission. We called it Water on Demand. So since November 1st of last year, when we inaugurated, this money's been flowing into the program. We celebrated our first million dollars of capital, dedicated capital for these water systems.
Jeremy: So you have I get the end consumer, they buy it. It's cleaning their system in their house and they're just paying a monthly fee to do this, but they don't have to worry about it. And you set it up, you do all the maintenance, all that, and it recycles and cleans their water, correct?
Riggs: Yeah. Now we don't do residential. Too small. We're talking about industry and agriculture uses 87% of all water. So that's our focus. And so we're talking about breweries, RV parks, housing developments. Anything that's .
Jeremy: Is it an environmental decision for them or is it a cost savings for them?
Riggs: Well, it's both. For example, let's say you're going to build a housing development in Alpharetta, Georgia, and it's off the sewage lines. You just spend $5 million connecting to sewage or you're going to put in a closed circuit system right on site. And it's mathematically much better. And so we have a move to suburbs and country because of work, work from home. This is a major trend. And so more and more housing developments are going up all over America that are distant.
Jeremy: From grid systems. Right. So then so you have the the industrial or commercial space or let's just say a residential development buying the product. And then you figured out a different type of way using the same concept of how MLPs did with the oil wells, a different way to fundraise, to be able to pay for that and opposed to a company paying for it and basically running a long cash flow model where you make the money out, you're raising the money from outside investors and to be able to pay for that and they're getting the passive income that is coming from there, a pretty good sense of what it is?
Riggs: Precisely. And and we retain ownership of that asset. So it becomes an asset rich business. Water on Demand becomes an asset holder. As a result, we can secure people's investment because that "oil well" is still in our possession, even though it's positioned at the client side. Remember, it's modular. We can repossess it, right? So they don't have an ownership model, they have a use model. It's just like software, right? It's just a service. And so and nobody's bothered by paying by the on the meter because by the way, there's a specified treatment spec and if we don't meet it, we don't get paid.
So they have peace of mind. They're not going to get in trouble with the city because it's going to deliver treated water. And as you said, they if they're if they care someplace, some places don't care. But if they care, they can recycle the water. Right. And that's free water. They don't have to pay for the water because it was theirs in the first place. Right. And a brewery, for example, even without reusing the water for beer, which most people are not interested in reusing wastewater for beer. Right. All water is wastewater.
Jeremy: It just sounds weird, right?
Riggs: It's just like toilet to tap, right?
Jeremy: That's probably not a good marketing piece.
Riggs: No. But great oppositional campaign for sure.
Riggs: So, but for wash downs, and steam vessels, you can still reuse about 50% of the water. So there's benefits and it cuts down your cost. Remember that water rates are rising.
Jeremy: When you see like a sprinkler system at a certain event, it says reclaimed water. That's usually using a system similar to yours in that sense where they're taking the water and reclaiming it.
Riggs: Right, gray water.
Jeremy: Well, same concept.
Riggs: 100%. And that's that's a really, really good idea. For example, right now we're working with a high, high end hotel chain to purify their incoming water. So the entire hotel has super pure water, not just in that bottle on the bureau when you walk in, but everywhere. And the next phase for those hotels is to put in the greywater treatment, which is a structural problem because you're going to have what's called purple pipes. Purple pipes are the pipes that carry the non fecal water. You don't want Blackwater, which is much harder to treat. You want the faucet and shower water.
That's a separate piping system. So generally newer construction is very hard to deal with. But that's kind of a limitation is that gray water is separately piped. But getting away from the details, we can get to a much higher recycling rates because it's a financially viable. Water rates are inflating at three times the rate of normal inflation and inflation is already going crazy. So we can protect business owners from excessive inflation. We can build in an inflation index, but not as ridiculous as what's happening out there. Places like Austin are just I think I think Austin is up to 14% of a household budget they pay for water. I mean, that's crazy going out of sight, right? So we can protect people from that.
Jeremy: So let's, I understand the business model and kind of how you're, what's good for the consumer, good for investors. You're kind of hitting all the constituents that you need to hit.
Riggs: The water industry needs transformation. It's in deep trouble. And most most consumers know this. They at the deep level, you know what? There's something wrong with the water. I've got to get a water system. I've got to have a water pitcher or whatever. They know the water is not great. It's worse than that. It's far worse than that. Condition of water on the planet is disastrous.
I don't know if you remember. You're probably too young to remember Andy Young, who became mayor of Atlanta. And he said that this is this random fact that he gave on an on an NPR interview. He said, if you build a pipeline, a water pipeline through Africa from from Guinea to Algeria, you will eradicate 50 major illnesses with that one pipeline. Right. So there's a major water problem in the world.
And you know what? It's solvable the technology. It's not a technology issue. It's an enablement issue. So how do we do the equivalent of an Airbnb or an Uber? And that's what I'm excited about. I'm excited about this way of letting people pay by the gallon and they just go ahead and they sign on the dotted line and boom, it's going. Now, how do you scale it up? Because it's an engineering problem of water, which is building the machines. Right. And maintaining them. And it takes ten, 20, 30 years to build a large company that does all that.
So what we've decided to do is, guess what? We're going to delegate it all. We're not, Water on Demand is not going to build its own machines. It's not going to maintain them. It's just going to be the fintech. That's all it's going to do. It's going to take the money. It's going to manage the contracts. It's going to enforce them. It's going to be asset management, all of that. And it's going to delegate the work, make sure that it gets done right.
So it makes a very, very thin organization and it makes it scalable. And all of a sudden, your entire water industry loves you because they're getting bluebirds. These jobs are dropping in like, "Oh, I just got a job. It's fully paid. Thank you very much." Right? And so now this is our equivalent of the Tesla supercharger network. We've got our own proprietary network and that's a barrier to adoption. So in addition to being scalable, it's also makes for a big fence. And that's why the strength of Water on Demand really is based on our willingness to not try and do it all, which is super important.
Jeremy: Are there companies that are already set up to run through the whole vertical that if you just are able to handle that fintech side, that you can outsource all the other pieces to it, that they're already established or you kind of creating a newer industry where people are jumping into it.
Riggs: Well, there are companies that specialize in what's called operations and maintenance, O&M. And we literally just signed this week an agreement with a major company in Envirogen, which is has multiple bases in America and also throughout Europe. And they do that. They've done it for 30 years. They already know stuff that we don't know. They got it like, yeah, yeah, we got it. We'll give you the tariff or we'll do all the contracts, everything. Don't worry about it. They're excited because again, it's a blue bird, right? We're bringing them money.
Jeremy: Well, this is a great conversation and I got a lot of good business. I got about two pages of notes of business ideas that I'll put in the notes section after the the episode, but also gave me a much better understanding around the water supply and the water crisis that we have and that there are smart people like yourself in your company trying to find solutions out to be able to fix that problem. So we appreciate the work you do and thank you for taking the time to share some wisdom with the listeners.
Riggs::Jeremy It's always a pleasure. I actually learned so much just by talking these things over with great guys like you, so I appreciate it.
Jeremy: Yeah, thanks. Appreciate it. Well, enjoyed the conversation. Farhad, what was one thing you could tell Riggs you got out of it. So I know he's didn't waste his time just talking to us the whole time.
Farhad: Honestly, I took a lot of notes. I mean, let me see what my favorite part was, really? Honestly, my favorite part was kind of your business model about how you pretty much implement the water system into them and it makes it easier for them rather than I'm trying to figure it out. It's just, Hey, you've already been paying for water. I'm going to implement the system and rather you paying to these people. You're just going to pay me. But it's also helping the cause of the environment as well. And I thought that was a great, great stitch, honestly.
Riggs: Thank you. That's pretty cool.
End of presentation
Partner has a Large Footprint
Riggs: Tech geek, so to speak, while while we were on that little thing, we got some good comments. Pavel Saiermann, "Do you have or you're looking at the international market?" The answer is yes. But truthfully, we are starting with the US. But as you, as you saw in that interview our partner Envirogen is, also has substantial footprint. It's actually a UK company. So they have very good footprint, regional footprint throughout America and they have European footprint. So very definitely that's something doable.
Another factor that I didn't discuss in this interview is that we've not only do we delegated the operations of maintenance, but also we want to establish more finance hubs so that we can have a Water on Demand Singapore that handles the Water on Demand process for the whole Malaysian Peninsula, for example, because they have local finance and local investors, etc. That's going to be a whole future thing. We're getting way ahead of ourselves.
So thank you for that, Pavel. And he's of course interested in learning more about our hotel projects and if we're looking to expand into desalination. Now the hotel project FYI, they've delayed the launch of the hotel til June and we expect to be integrally involved with this. Much more to follow. We are built in our systems built. This is the the hotel hasn't launched, so I can't publicize it.
I can't say more specifically what it is. But the hotel, this first hotel is a real for us, it's a tentpole because it's a marquee client. It's a very high end client. They've adopted us chain wide as a preferred vendor, or at least they're going in that direction. They also have a roadmap. The chief engineer there has a roadmap of going beyond incoming water to the gray water and so forth. So very, very good client. And it will get us going in this super pure water space.
I believe that we will be doing... See, It's not a, desalination is not a technology issue. There's really good technology for desalination. More and more is coming on the way to make it less energy intensive. I looked into it last year, as Ken will recall, and I concluded that there's, it's already moving very, very fast. What we can do is be the financiers. Right. It's not a technology issue.
Oh, you've got a desal project. Fine. We fund it. Thank you very much. On the meter. Our competitor, Seven Seas, for example, does that. That's what they specialize in. They do desalination projects for entire islands and the whole island. They are the private water utility for that island.
Ken: And they're great revenue generators.
Riggs: They make.
Ken: For the investors.
Riggs: And now they get their funding from JP Morgan Fund and Cambrian, of course, our other major competitor, gets their funding from venture capitalists. We are the only people getting our, who developed this Water Like an Oil Well™ concept where any investor can come in and get royalty. And I believe that is, again, the more scalable model. Not to say that in the future we won't get institutional money, but I love the fact that we can get people involved who can, you know, later, when we get to the actual discussion, I'm going to show you some, Ken, I'm going to be showing you some some graphs. I'm going to show them on screen. You want to get into income bearing assets for sure.
So with that, I'm going to go on here. Those are the videos. But I'm going to. I'm going to go into decentralization 1.0, which was 2016 and where it's going now. And you'll get an idea of where we've evolved here. It started 2016. When I read, I think in February 2016, we had just acquired Progressive Water. I read this very, very important well, it's a webinar and anybody who wants it just send me an email and I will send you the actual webinar file that you can listen to this. But nonetheless, it was for me a really important event. And so what did it say?
Well, basically, it was saying, look, current water and wastewater treatment infrastructure faces a crisis. Sorry, it was June, June 2016. So complete design rethink to get around this prohibitive, prohibitive cost. New technologies to decentralize, which we've now invested in, automated analytics. All these good things that have become a reality.
Recognizing the Trend
So with that, we by September, I wrote a major article, an editorial in Water Online, which got into that, and I referred to Thomas Watson, who in 1943 said, I think there is a world market for maybe five computers. Hello. And this is a very good example of how decentralization works. Right. And in that article, I also said that over here on the right, steadily increasing water costs are forcing companies to reuse as much water as possible. And of course, businesses often lack the people money and know how to do so.
This is only a small part of the article, but it gives you an idea of what we were thinking already back then, and by 2018 we had found the acquisition that would enable it, which was became Modular Water Systems™. But of course, as I describe in a podcast, we were not yet, Dave Johnson, Webinar Research Lux Research Webinar File. Will do. Thank you. And so we still had the other the other foot, right? One foot was okay. The technology, the other foot was how do we accelerate it? And that was the money.
All right. That was decentralization view one. So let's walk through it. This was decentralization V1 which said, look, we have all these centralized systems, many, many small systems. And, you know, it's the small systems that are the trouble, right? The handful of mega systems that actually serve over 200 million people. They work well, but there's a ton of these smaller ones. And guess what? People are moving into the country and now they're no longer being served by that big New York or LA system. They're being served from something in Westchester County or or Bergen County or whatever. And that's a different world. And it's not well served.
It is the end of centralization, right? The central infrastructure is failing. Here's the billions required in capital investment. Problems getting worse. If you look at this graph and look at between 2010 and 2025, it's about a 75 right now. It's about a $75 billion a year investment gap. And guess what? The Biden administration only came up with $55 billion, which I'm not blaming on the Biden administration.
All administrations have been terrible with water. That's just, for some reason it's a blind spot they have. So moving on here. That's why it's going private. And and this luxury search webinar identified how water scarcity high reuse are driving this infrastructure.
With lower volumes of wastewater you have smaller pipes to the central wastewater treatment plant, and we have advanced treatment technologies for localized resource reuse, which we have. So that's rolling along nicely.
And it's a fast growing megatrend where it's about what are the operational costs. Remember, operation and maintenance with a compact footprint, remote monitoring, which is part of our model and higher wastewater reuse, these are all built in.
So that was the conclusion of the Lux research thing where it says, look, big rethink redistributed everything smaller emerging systems getting more efficient, remote monitoring and industrial Internet of Things IoT in water address the needs of a decentralized infrastructure has some numbers here. These are probably bigger by now this is 2016, but decent numbers. What's that? It looks like about $60 Billion right there. So it's a market. It's a market. All right.
So then we move on decentralization 2.0, which now we're calling private water utilities. All right. Now, the problem is businesses benefit from this decentralization, but they don't have the capital and don't have the water expertize served by private water utility. They can pay on the meter, no capital risk. No water expertize required. Focus on your core business. And this is the benefit of privatized water management. It's an income bearing asset and so hard asset, continuing royalty and it is the new investable commodity. And unlike other assets today, water is at the beginning of its run.
It's a growing sector. It has its pioneers, Seven Seas, for example, as I mentioned, Cambrian Innovation and of course, Water on Demand, which is about to become its own company. We are the only ones who welcome any investor, large or small. And by the way, newsflash, we will very soon have again a Regulation A offering which allows unaccredited investors, thank God, to come back in. This is something I wanted to do for a very long time. Our last one expired April 27 to 2021, and it was something that was not worth renewing at the time.
Pathway to Going Public
Now we're doing it for Water on Demand, and it will be the pathway that water demand takes to itself become public. All right. Secondly, only Water on Demand is building a network of operating partners. And those are the big two big differentiators. I mentioned the third one is, which is this idea in the back of my mind about building multiple financial hubs, way ahead of ourselves. So we'll stick with these differentiators, which are the ones we have today.
It is the innovator and the fast growing private water utility sector.
So free wheeling discussion, bada-bing bada-boom. Gentlemen, let's get it on.
Ken: Where do we start?
Riggs: Are we having fun? Are we having fun yet?
Simplicity of Communication
Ken: Yeah, we are. We are. Because we've had so many, we've been doing so we've been talking about this almost nonstop for weeks and weeks and weeks. It's really, what I really liked about your interview with the gentleman and his and his what you call him his tech geek guest. You described it. In a way that was kind of technical and he was able to read it back to you using very colloquial language.
In other words. It doesn't matter if you're doing good, if people don't understand it. What we're doing right now is very easily understandable. This guy heard it for the first time ever and 2 minutes later he was able to kind of report back to you what he got. And he got it perfect, right? He got it almost perfect. So to me, I believe that our ability now, we've had this idea for a long, long time. And I believe that our message has always been right. It's the simplification of its communication that I think is going to be the spark to really, really drive phenomenal levels of interest in this right away.
Riggs: Wow. Well, I love it. Thank you very much. And with that, Andrea, you look like you want to say something.
Andrea: I was about to say what a beautiful way to put it, like the concept of simplifying something that otherwise would be extremely or could be very complex to understand. But the concept of water like an oil well or distributed utility for the water system, a distributed infrastructure, I think it really communicates what is the goal, what we're trying to do.
And and, you know, people don't necessarily appreciate the amount of work behind the scene that our group is putting in to really create something to be proud of, not just something beautiful or something, but something to be proud of. There is really a lot of work behind the scene now. You see a Riggs and Riggs makes it look very easy all the time, but I can tell you there is a lot of blood, sweat and tears behind the scene to accomplish such a mission. That's all I wanted to say.
Riggs: Oh, I. I don't do the work. I just float. Yeah, I just wave my hands.
Andrea: That's really not true.
Riggs: You people. You people do that. That water thing.
Ken: Thing, do that thing, do that thing. Ken, go do that thing. Right?
Riggs: And then. And then Ken is like, Oh, Lord, I wanted to show...
Ken: One of the hardest working that I know.
Earnings Going Down
Riggs: I want to discuss a couple of graphs here and Keith Roeten, "Do we have the personnel in place to facilitate the exponential growth expected?" Very good question and I will get to that shortly. Let me just get through this. Earnings estimates are going down. This is not a great sign. Since the beginning of the year? Since February? Mid-late February, we've had a lot of earnings estimates going down, which is weird because the dollar is inflating. So in pure dollar terms, we should be doing better. So that's an odd number. A bit of a canary in a coal mine, I think.
Here's a crazy number. Germany's producer price index. Oh, this is the highest it's been since 1949.
Ken: I was hoping you bring that up. That is super scary.
Riggs: That is ridiculous. So they've gone from roughly a roughly a 0 to 5% range to 31% and climbing. It has not stopped. Right.
And then the third graph that I have here is record shipments of crude. So Russia's war is has all of a sudden unlocked the oil patch. Now, what does that mean? That means that obviously it's a good short term for energy, US energy companies, but it also means that we have a lot of stress in the system and it seems to me that currencies are in a strange place and we have these oddities like the, I didn't show it here, but there's that is a graph of the number of ships waiting outside of I think it's Hong Kong and it's again, a graph skyrocketing like that. It's gone from two from 80 to like 300 in a matter of a couple of weeks.
Income Bearing Assets
Why? Because all the drivers are on lock down. These crazy sort of 100 year events are happening all at once. And what it says to us is, okay, here's the problem. The dollar is terrible. But, you know, investing in stocks is terrible, too. I'm looking at my wife's 401k and she's I've got her in these various things that should be good, like gold, gold ETF and things like that. You know, it's not doing that great. Why? Because equities are equities, right? Stocks are stocks.
What is important is to get into an income bearing asset because that will hold the line. You'll make your money. It will be inflation indexed. And furthermore, it's something that the the asset will retain value outside of the dollar because these water equipment projects lasts for decades. So I just those are the three graphs I wanted to put up and get your thoughts.
Ken: Well, the German graph reminds me of Weimar Republic.
Riggs: Weimar. Oh, Lord. Well, I don't think they want to hear that.
Ken: No, I know. But they were the Weimar Republic, were they not? I think that's a consequence and I could be wrong, but I was thinking about that today. I think it's just the concept. I think America, because we have such a much larger economy, you know, we don't we don't we're not showing stuff like that yet because Germany is a smaller economy. Maybe they are, but I think that that's a real warning whistle. You saw Powell today was going to raise interest rates by half, half a basis point, a 50 basis points, rather, by half a percent.
Riggs: And stocks took a dive.
Ken: Stock stocks took a big, big, big hit. Of course, that affects the housing market because you can't buy, you know, your mortgages aren't as cheap. This is really it is 100. It's like 100. I lived in Long Beach during the Superstorm Sandy. A hundred year storm. I'm there. Right. This is that 100 year storm, finance. You mentioned something about assets that I thought was was worth kind of expanding on. So in the very smart people that have been doing our research with us, I noticed that we've been using the term that water has inflated at about three times core inflation. It's actually 4.25. Right.
Riggs: See I'm a CEO, not a math geek. Okay.
Only Asset Class
Ken: I'm a, I'm a doctor, not a bricklayer. OK Dr. McCoy So, so no, no. What we use it because that's what we read. But the reality is when you look at and maybe it's gotten worse, like maybe it's just gotten bigger since then, it wouldn't it wouldn't surprise me. The fact that water is the only asset class that is not, is not only not trading at an all time high, but hasn't even actually begun to be truly monetized. I think it's probably the most exciting part of this thing.
Now, normally when you you make a trade, when you seek the safety of assets, when you go, okay, I'm going to go into gold, I'm going to go like you said, gold doesn't earn a rate of return. But what's your what's your fallback? Well, it's going to be there when I'm done. It's going to be there when all the smoke clears. Right. Same thing with all of these assets. Even if you're buying them at tops and you are water, you're buying at, I mean, essentially a bottom because it's never been monetized before.
Now normally the trade off is. Yeah, but there's no really major wealth altering event which kind of you weather the storm you're in the remember the fact that all of this surrounds a vehicle that we we intend to bring to the market as a public company, you're not giving up that really incredible upside potential while still protecting your assets. I think that that is a I believe it's an irresistible combination.
Focus is FinTech
Riggs: Well, that is very well said. I also wanted to address some of the questions here, because I think they're very appropriate. Keith asked, "Do we have the personnel in place to facilitate the exponential exponential growth expected?" Well, the good news, Keith, is that we're keeping our mission very, very tight. One of Andrea's big missions is going to be to build an incredible organization in Water on Demand that has the capabilities. We're going to invest in software, what a specialized project management and contract management personnel will need to be able to enforce the commitments we make. These are super important things.
And so but the good news is we're just doing the fintech. Right. Stripe is worth $152 Billion, and all they're doing is financial technology. They're not being American Express or anything else. They're doing that one thing. And so at least at least there is that I'm not minimizing it. It is a job. And the other, here's the other thing is that we're trying very hard to get some rapid deals going, which we hope to announce soon. We're in, we're in live negotiations with a first client that likes the concept and is ready to play. And that's what's being worked on. But even after we do the deal, then you've got to build the machines and oh my God, it's like trees growing. So we just got to keep feeding the front of the pipeline in the back of the pipeline, starts getting it out. That's the news.
Emily wants to know, "It is genius. It really does communicate with the goal is. Riggs, how big would a farm have to be in order to qualify for Water on Demand system on site?" Very good question. A farm does not have to be very large. Remember that we can go as small as 5000 gallons a day. It does not have to be huge.
Now, a decent hog farm or poultry farm, it's more like 100,000 gallons a day. It's huge. It's manure, a lot of ammonia, a lot of bad stuff. And as you recall, we had a technology that we built that we built for a major Spanish vendor. Unfortunately, COVID brought them to their knees and they had to shut down.
It was a, it was a venture of an existing, was it Lojares? It was an existing player in the space. And they just shut off their little pilot program. But the need remains. And we actually built a Modular Water Systems equivalent that's ready to go. And Ken, as you know, we're in discussions with our friends up in in Wisconsin. Is it? I think it's Wisconsin.
Ken: Well, yeah, the whole upper Midwest, right?
Riggs: Yeah. They're working on getting water demand clients for these hog farms. So that's a major, major requirement. So that's really interesting. Thank you very much for that, Emily. Let me see. I've got some more messages here. Ken Bogart says, Ken, for president, I think I.
Ken: I don't know if he means him or me, though.
Riggs: No, He likes the name Ken.
Ken: Okay. So he so basically I go, you were me. He goes, yes, that's what that's his answer.
Competitors and Market Strategy
Riggs: Quickly here, Pavel says, "Can you speak on some of your competitors? Who are they? (Veolia, Eco Sciences, JPX, etc.) the space as a whole and how you're planning to attack the market?" People like Veolia are focused on primarily on the old utilities marketplace. They operate entire cities, right?
They're very much about the public utility, which is still a big space. It's shrinking, in my opinion, or at least it's underfunded for sure. But it's a major, major space. And American Water Works, guys like that, the competitors we have are the pure plays in what's called water as a service or design, build, own, operate.
We've identified two that are key and very strong competitors Seven Seas Water, which was originally part of Echo Ventures bought by Culligan but then got spun off. And it's now a unit, I think, of a JPMorgan fund of a PE fund operated by JPMorgan, I believe. And they do this island private utility for islands, very specific marketplace. And then Cambrian Innovation, which is based in New Hampshire, but has all its clients in San Francisco Bay Area, the breweries especially and both of these companies are very good.
We've differentiated ourselves again by deciding, making a strategic decision not to build the systems ourselves and both of those players do, which is why they're not scaling. They're doing a great job, but they're not scaling. And the second thing is, is that they're relying entirely on institutional investing, which is a good thing.
But here's what I like about what I call democratic investing. It's huge. It's actually where all the investors are as big as Wall Street is. It's nothing compared to the size of the commercial marketplace of investors. I mean, look at Governor Abbott. He shut down the border for 15 days because of the, he was trying to make a point about immigration. In those 15 days, it cost something like $4.2 billion in commerce. That's Wall Street is a lot of money, but the actual US economy is about $1,000,000,000,000 a year or more, actually much more because our defense budget alone just exceeded $1,000,000,000,000.
Ken: Our GDP is 18,000,000,000,000 trillion, 18 trillion.
Riggs: Thank you very much. So that is the real money. So you say, okay, where is the money? The money is actually in you and me know, it's in those small dollars adding up to big ones. This is why Robin Hood is such an important player. It's all the small players aggregated. So aggregating small investors is a very strong point.
Ken: Also, every bank in the world. Whose money is it? It's our money.
Riggs: Of course.
Pure Financial Play
Ken: And it's not all of it. Hey, Riggs, could I expand on something that Keith asked? Because I think what he was asking is, do we have the personnel in place to facilitate? You know, I think maybe he and this is a thought that occurred to me when I've been asked this by investors before. The answer is the personnel already exist. They don't have. Like you just said, we're not manufacturing these things. So everyone out there who's meant, the world is your manufacturer. Therefore, you have the personnel, right?
The contracts. There's thousands of companies right now working on these contracts. Those are your that's your contract pipeline when you're providing simply the finance, when you're providing just the fintech. If GM Financial decided they were going to finance every car ever made, I wouldn't care who I write the check to, would I, right?
So by turning this into a pure financial play, you've automatically adopted the skill set and the brainpower of the entire industry. Because you're no longer their competitor, you're a natural partner. What did you say was your favorite saying?
Riggs: Never compete with your natural partners.
Ken: These are our natural partners. But what we've been doing is we've been saying, well, I have a better piece of technology and we're wrestling each other, trying to get that deal, getting that very parochial view. But once you say, okay, you know what, it's your deal here, I'll do better, I'll provide the financing for you. Now they gravitate to you. So the the point, Keith, is that the personnel is already there. They're going to work every day. They just don't work. They don't know they work for us yet.
Channel Marketing is Huge
Riggs: Channel marketing is huge for us. Why? Because the and I'm going to wrap this up very fast, the consulting engineers, the manufacturers, sales reps, these are people who want their projects to get funded and get going. And so in addition to the water companies who will get the business, like you and I were talking to our friend out on the West Coast, he said, well, I got that golf course and they're just stalled for lack of the $5 million. So all things are well said. I'm going to go ahead and just check one more time for messages.
Ken: Yeah, we've hit a record today.
Riggs: Dave Johnson says, "I know you know that frackers use a great deal. Amount of water for injection often truck the produced water away for treatment. Seem to me that would be a good potential market. They could use a system and they move the asset to the next project." This is very true, Dave. And we had backed away from frack water treatment. Why? Because it's dominated, it's dominated by major players.
But if we're just to finance we can do it. Desalination. We backed away from it because it was a whole space that was technologically well advanced. But we can finance it. So all of a sudden we become very agnostic. We're the Switzerland of the water industry. That's our new model were the Switzerland of the water industry. So with that, Andrea, I just made up a motto. It's huge, it's fast, it's incredible. You know, we're the Switzerland. That's what we.
Andrea: Are. Oh, shit. That's awesome.
Riggs: I'm going to. I'm going to start yodeling. No, I won't.
Ken: Please real fast.
Riggs: Ken Berenger, of course. Full picture schedule call. He will tell you the real stuff. Michael Hardison says, "OC is facilitating water synergy."
Ken: Give that man a cigar.
Scaling the Company
Riggs: Like it. And also, Pavel, I have very little time to address your question, but, "Do you own or license patents?" Yes. We're the master licensee of five international patents around Modular Water Systems. Go to our annual report on the SEC Edgar site and you can see our patents listed. Well, it's on our website too, under intellectual property. "And a company operation scale?" Last week we showed how we were moving from a $4 million a year company to a $12 company. As this big wave of new business comes.
And frankly, our guys and unfortunately is still all guys are nonstop wall to wall, you know, trying to fulfill the amazing amounts of sales they've had. So were not huge, we're growing and a good company and we're only taking the most profitable deals right now so we can pick and choose. But having said that, we're more interested in the financing side of things, which means we don't have to operate. So that's taking us all the way.
Private Water Utility
Private water utility. I love it because how many times have people said, "What do you do, Riggs?" I'm in water. "Oh, you mean like residential water systems?" No, industrial water. Poof, they go away. But now we can say...
Ken: The eyes glaze over.
Riggs: Right. I, I do private water utilities, you know, the public water utilities. We're privatizing it. We're making private water. Amazing. And then I'll say, but water is supposed to be free.
Ken: Well, wishful thinking. You're paying for water now, right?
Riggs: Exactly. Right.
Andrea: Nothing more.
Ken: I think. And I think as an extension of that, I say what we're providing is an a fintech innovation to private water utilities. I think that completely encompasses, I believe, kind of the very brief explanation.
Riggs: The fintech the fintech element, for sure. Well, we're not we're not going to play slogans, slogans a minute on this show. We've arrived at one hour, which is very long for us. Thank you all for lasting all this time.
Talk to Your Friends
Andrea: Could I say something sir? Just just very quickly, very, very quickly. I would love to ask for the audience. And we will provide well, they can use any of our email addresses, but we really need your help to talk about what we are doing and for others to participate and get with Ken to get more information. Now, if you don't know what to say, please contact us about it. Like if you're like, yeah, but I don't know what how to communicate, how to tell the story, how to contact us about what you can say, how you can present it. Ken is the master of this. Like he is the poet of making things simple and understandable. So if you don't know how to, if you want to, but you don't know how to contact us because that's part of our job, to involve enough people to help us in this mission. Ken, you wanted to say something.
Ken: I do. I want to expand on what you just said. I could. Today, I put together a simple for my my good buddy, Rick Keller. Hi, Rick. Very simple. He said, "I don't know what to say." Here, I gave that video that Riggs played in the beginning. That really does beautifully explain. It's 4 minutes right, along with kind of the big vision, a deck that provides a bit. If you provide that to a person, you can just step back and then have me fill in the blanks, have me do the Q&A. But that will give them a beautiful start to truly understanding our vision between Riggs video and the slide deck that I provided.
Riggs: Beautiful. Then that slide deck is.
Ken: And I made it available.
Riggs: And what is fact that is the beginnings of the institutional slide deck that.
Ken: Yes, exactly right.
Riggs: Amazing Dustin Muscato is building. Ken pirated a few slides from it.
Ken: Not yet but I'm working on it.
Riggs: But nonetheless it's a great piece of work and it has some fantastic factual slides. Thank you everyone for coming on board. Say again. What?
Andrea: Thank you, everyone. I just said. Thank you, everyone.
Riggs: All right. Well, I love it. Thank you all. It's been fantastic having you tonight. And we will not go this long next time, but it's going to stay just as exciting. Everyone, good night and have a great weekend. Ciao.
Ken: Take care.
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