The Fundamental Molecule

I owe what I get to do every day here in a job I love to many people, but Scott Bryan really helped. In 2015, he took a chance on me to become the VP of Programming at Imagine H2O running the Accelerator, and it was a learning curve which laid the groundwork for what we do here at BIV. Scott is one of the most important figures in early stage water. Since 2010, he has built Imagine H2O into the premier accelerator for water entrepreneurs running three annual programs, and they announced their first pilot fund last year. All of this adds up to an enormous and rapidly growing degree of impact in water as the companies they backed and supported have revolutionized everything from groundwater management to flood insurance. 

Please enjoy my conversation with Scott Bryan. 

Subscribe to The Fundamental Molecule here: https://www.burntislandventures.com/the-fundamental-molecule

For the full show notes, transcript, and links to mentioned content, check out the episode page here: https://podcasts.apple.com/us/podcast/the-fundamental-molecule/id1714287205

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Scott Bryan, President at Imagine H2O, joins Tom today to discuss the evolution of the water technology ecosystem. Together, they start by taking a look at how the early days were characterized by business plan competitions before the subsequent shift to emphasizing team strength, execution ability, and customer-centric approaches. Scott then goes on to highlight Imagine H2O's evolving selection process, the critical role of pilot projects, and the importance of impact measurement. Noting that water is a less polarizing issue than climate, allowing it a degree of stability, today’s episode also explores philanthropy in the water sector and Imagine H20’s focus on Asia, before wrapping it all up with Scott’s sage advice for water entrepreneurs.

00:00 - Imagine H2O’s Role in Water Innovation

02:19 - Why Water Has Lagged Behind Clean Tech

04:08 - Early Challenges in Water Entrepreneurship

05:40 - What Makes a Water Startup Succeed?

07:30 - The Hidden Dangers of Fundraising Success

09:41 - Key Milestones in Water Innovation Growth

11:17 - How COVID Shifted the Water Tech Landscape

13:17 - Why Most Accelerators Fail at Water Startups

15:15 - The ROI of Water Startup Accelerators

16:14 - Measuring Impact in Water Innovation

17:45 - Why Water Needs Standardized Impact Metrics

18:31 - The Unique Challenges of Running a Water Nonprofit

19:34 - The Role of Philanthropy in Water Innovation

20:24 - Why Climate Funders Must Care About Water

22:46 - How Water Ties Into Public Health and Equity

25:20 - Why Pilots Are Critical for Water Startups

28:12 - How the Water Innovation Pilot Fund Works

30:40 - Expanding Water Tech Innovation Internationally

32:24 - Key Lessons from Imagine H2O Asia

33:48 - Hiring the Right Talent for Water Startups

35:12 - The Future of Water Tech Investment

36:20 - Why Water Is a Bipartisan Issue

38:22 - What Entrepreneurs Must Know About Water Policy

40:11 - The #1 Advice for Water Entrepreneurs

Links:

Burnt Island Ventures: https://www.burntislandventures.com/

Scott Bryan: https://www.linkedin.com/in/scottmilesbryan/

Imagine H2O: https://www.imagineh2o.org/

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Key Takeaways:

"Water is a trillion-dollar industry. It's the future of the world's most valuable resource."

"Philanthropy in water is changing. It's not just about wells anymore. We need sophisticated impact engines."

"There are four pillars: climate, health, equity, and efficiency. They guide our work and impact."

"Water is not as polarizing as climate. It's a bipartisan issue. We must manage resources better."

"Take the check from people who know the space. Measure value in burritos, not just equity."

"We need to standardize metrics in water. The math is all over the place. Precision is key."

"Imagine H2O Asia is a base to think regionally. It's about testing business models faster."

"We need to think beyond a 10-month accelerator. It's a long journey, and we're here to help."

True dyed-in-the-wool software pros are a valuable breed in water and Paul Hauffen is one of the best. A two-time entrepreneur, he sold his last company Sedaru, and, in a founding hiatus, is bringing his enormous experience to bear helping companies along their trajectory, partially as a BIV Venture Partner. Paul is a very wise man indeed and his insights on building solid foundations for companies, the hard yards of especially early sales and reference building, and the traps that founders can fall into are second to none. We're so lucky to work with him. Please enjoy my conversation with Paul Hauffen.

Subscribe to The Fundamental Molecule here: https://www.burntislandventures.com/the-fundamental-molecule

For the full show notes, transcript, and links to mentioned content, check out the episode page here: https://podcasts.apple.com/us/podcast/the-fundamental-molecule/id1714287205

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Executive, entrepreneur, advisor, and BIV Venture Partner, Paul Hauffen, shares his insights on several valuable topics for water tech startups including common pitfalls for founders after securing funding, his personal journey into the water industry, and the development of his previous company, Sedaru. Paul offers advice on identifying and engaging early customers, outlines the benefits of targeting utilities, reflects on the evolution of software within the water sector, and shares the future of software opportunities. He finishes up by providing his perspective on marketing and sales, defining product-market fit, and emphasizing the vital role of strong customer relationships.

00:00 - Paul Hauffen: Water Tech Visionary

02:03 - The Biggest Mistake Founders Make

03:57 - Why You Shouldn’t Celebrate Fundraising

06:01 - Effective Startup Marketing on a Budget

07:38 - Why Water? A Founder’s Journey

11:27 - How to Identify a Profitable Market Opportunity

14:50 - Building Trust Through Customer Inclusion

15:21 - How to Land Your First Customer

16:32 - The $40K Napkin Deal: Winning Early Sales

18:01 - Checklist for Finding the Right First Customer

21:16 - Why Utilities Make Great Customers

24:25 - How to Win RFPs and Lock in Long-Term Contracts

26:28 - The Evolution of Water Tech Software

28:31 - The Future of AI and Software in Water

33:30 - AI’s Role in Water Innovation

36:29 - Marketing and Sales for Water Startups

39:03 - Pricing Strategy for SaaS in Water Tech

39:49 - Defining Product-Market Fit in Water Software

42:17 - Lessons from Advising Water Tech Startups

44:01 - The Customer Inclusion Loop

Links:

Burnt Island Ventures: https://www.burntislandventures.com/

Paul Hauffen: https://www.linkedin.com/in/paulhauffen/

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Key Takeaways:

"Founders often get intoxicated with marketing before proving value."

"Establish product market fit before allocating budget to marketing."

"Practical marketing is essential until product market fit is achieved."

"Build excuses to interact with customers to strengthen relationships."

"Utilities are great customers because they prioritize productivity over profit."

"AI allows us to revisit legacy workflows and solve problems faster."

"Early customers should be small to mid-size, progressive, and decision-makers."

"Balance vision with execution to turn ideas into reality."

"The customer inclusion loop is vital for growth and trust building."

There is a lot going on in AI right now, from the travails of ChatGPT to the technology being essentially single handedly responsible for the surge of the so-called “Magnificent Seven” and therefore the overall S&P 500 in 2024. But what does it mean for water? Mudasser Iqbal is a career technologist and an exceptional guy, previous CEO of Visenti before its acquisition by our friends at Xylem in 2016, and he and his co-founders reformed to pursue the AI opportunity in water. TeamSolve is going after a tough problem, essentially aiming at solving the lack of easily accessible institutional memory and insight in water utilities using the power of AI. This is a fascinating run through the ins and outs of applying this technology and water, the practicality of problem solving, working with remote teams, maintaining customer focus and much, much more. Please enjoy my conversation with Mudasser Iqbal. 

Subscribe to The Fundamental Molecule here: https://www.burntislandventures.com/the-fundamental-molecule

For the full show notes, transcript, and links to mentioned content, check out the episode page here: https://podcasts.apple.com/us/podcast/the-fundamental-molecule/id1714287205

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Mudasser Iqbal, Founder and CEO at TeamSolve and noted ‘AI use in water’ visionary, details his organization’s mission to revolutionize utilities with their "knowledge twin," a formidable resource which effectively combats expertise loss. Accessible through everyday platforms, the Twin boosts efficiency for field techs and command centers. Building upon lessons learned from Visenti and Xylem, Iqbal stresses practicality, user feedback, and a distributed team model. He also urges water innovators to embrace tough challenges and strategic partnerships, mirroring TeamSolve's customer-centric, globally impactful approach.

00:00 - AI's Evolution and Real-World Applications

04:48 - Agentic Frameworks: Beyond Generative AI

07:04 - Why AI in Water Matters Now

09:37 - Real-World Examples: Institutional Knowledge Gaps

12:25 - Knowledge Twin: A Practical AI Solution

19:17 - Practical Uses: Field Technicians and Command Centers

24:21 - Ensuring AI Reliability and Trustworthiness

26:22 - Remote Team Collaboration: Lessons from COVID

29:30 - Vicente Learnings: Collaboration and Customer Focus

32:45 - Building a Customer-Centric Company Culture

35:15 - Creating Moats: Knowledge Sharing and Network Effects

38:51 - Maintaining Focus Amid Growth

40:40 - Advice for Water Entrepreneurs: Solve Hard Problems

Links:

Burnt Island Ventures

TeamSolve

Mudasser Iqbal 

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Key Takeaways:

"AI has been around for decades, contributing to drug discovery, predictive maintenance, and more. It's not new, but its applications are expanding."

"Generative AI connects the dots in water systems, overcoming data limitations and enabling real problem-solving."

"Institutional knowledge in water utilities often retires with employees. AI can bridge this gap, preserving essential information."

"AI's promise lies in solving real-world problems, not just generating text or images. It's about practical applications."

"Focus on solving a hard problem that's bothering customers. Stick to it for long-term success."

"AI can help leapfrog water utilities that are just starting their digital journey, providing practical solutions."

Over the last decade, I've been so lucky to learn from seriously good water people, and Debra Coy is one of the best. Over four decades, she has built an extraordinary body of work from public markets analyst to XPV, the preeminent water investing firm that has been extraordinarily supportive to us, to her current independent role advising and sitting on the boards of major water companies. She sits on the investment committee of our Opportunity Fund and it has been such a pleasure to benefit from her insight and wisdom as we have made our first two investments at the Series B. This is a really fun conversation. Everything from the lessons for founders, from earnings transcripts to lending her perspective on the overall history of private markets investing in water. Please enjoy my conversation with Debra Coy.

*Please note in the episode Debra mentions XPV raised a $250m FundI I. The correct amount was a $150m Fund I.

Subscribe to The Fundamental Molecule here: https://www.burntislandventures.com/the-fundamental-molecule

For the full show notes, transcript, and links to mentioned content, check out the episode page here: https://podcasts.apple.com/us/podcast/the-fundamental-molecule/id1714287205

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Legendary water industry leader, Debra Coy, reflects on the water sector's transformation from obscure investment to a recognized industry. She highlights the impact of increased investor knowledge, rapid digital tech adoption, and a new generation of business-savvy entrepreneurs. Drawing from her experience at XPV Water Partners, Debra emphasizes their focus on strong entrepreneurs and hands-on company building, and champions talent recycling within the sector. She also offers advice to aspiring water entrepreneurs: study public market data, balance ambitious vision with practical execution, and prioritize diverse leadership for enhanced performance.

00:00 Learning from Water Industry Leaders

02:30 - Water's Transformation into an Investable Sector

03:15 - Challenges Across the Capital Stack in Water Investing

04:45 - 14-Year Tech Adoption Cycle in Water

06:45 - The Critical Role of Entrepreneurs in Water Innovation

09:00 - XPV's Focus on Scaling Water Companies

13:20 - Building Synergies with Operational Focus

17:40 - Importance of Talent Recycling in Water Startups

20:00 - Axius’ Growth Strategy with KKR Partnership

22:30 - Managing Water Challenges in the Permian Basin

27:30 - Public Markets as a Guide for Water Entrepreneurs

30:20 - The Value of Reading Earnings Call Transcripts

33:00 - Public Market Sentiment Around Water Investments

35:25 - Key Traits of Successful Water Leaders

37:30 - Advancing Gender and Diversity in Water

40:25 - Balancing Vision and Execution as an Entrepreneur

Links:

Burnt Island Ventures: https://www.burntislandventures.com/

Debra Coy: https://www.linkedin.com/in/debra-g-coy-792992/

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Key Takeaways:

"Water's finally becoming a real industry."

"The quality of the entrepreneur is critical."

"Digital tech adoption in water has a faster rate. It's shifted the market's openness to innovation."

"The investment world has woken up to water as an investable sector.”

"Public markets give you a constant report card. It's a real-time view of investor sentiment."

"A diverse leadership team is a better leadership team.”

"Think big but do small. Balance vision with execution to succeed."

"Investors are emotional. They want to invest in what they believe in."

"You can't wait for it to get better. You have to do what it takes to make it better."

We all know about the CEO in a company. When the company is small, the CEO does everything, and when it's big, the CEO sets the vision, hires the right people and makes sure they have what they need to be successful. But what about a layer deeper than that? Guillaume Clairet is a fascinating example of a world class COO. Now he's too modest to be known as the power behind the throne, but he's the guy that makes sure what needs to be done gets done. And it's an interesting time for him after both the $395 million delisting of H2O Innovation by Ember Infrastructure and their acquisition of NextEra’s Distributed Water business. Along the way, H2O Innovation have done things their own way and have built an exceptional business and this is a fascinating insight into the practicality of that journey. Please enjoy my conversation with Guillaume Clairet. 

Subscribe to The Fundamental Molecule here: https://www.burntislandventures.com/the-fundamental-molecule

For the full show notes, transcript, and links to mentioned content, check out the episode page here: https://podcasts.apple.com/us/podcast/the-fundamental-molecule/id1714287205

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H2O Innovation COO Guillaume Clairet shares his insightful journey through the world and business of water. He discusses navigating the complexities of public markets, mastering M&A strategies, and building robust recurring revenue models. Guillaume also details H2O's transformative acquisition of the NextEra’s Distributed Water business, a strategic move towards owning water assets and offering diverse customer solutions, and finishes up by offering his invaluable advice to aspiring water entrepreneurs.

00:00 - Water Technology & Entrepreneurship

01:50 - Erin Brockovich Inspiration

03:45 - H2O Innovation Origin Story

06:12 - Early Roles & Company Growth

07:30 - Value of Full-Cycle Experience

09:23 - Navigating Public Markets

11:42 - Transition to Recurring Revenue

15:16 - M&A Process & Integration

19:03 - Successful M&A Integration Strategies

21:01 - COO Role: Serving & Problem-Solving

21:53 - When to Hire a COO

23:04 - CEO Sequencing Operations

26:18 - Going Private with Ember Infrastructure

29:25 - NextEra Acquisition & Future Strategy

30:30 - Holistic Water Solutions Provider

36:14 - Advice for Water Entrepreneurs

Links:

Burnt Island Ventures: https://www.burntislandventures.com/

Guillaume Clairet: https://www.linkedin.com/in/guillaumeclairet/?originalSubdomain=ca

H2O Innovation: https://www.h2oinnovation.com/

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Key Takeaways:

"The CEO sets the vision. The COO makes it happen. It's a partnership of vision and execution."

"When you're a startup, you wear many hats. You learn every aspect of the business from sales to operations."

"Public markets teach resilience. They keep you on your toes, driving for performance and accountability."

"In acquisitions, integration is everything. It's not just about buying a company, but making it part of your own."

"A CEO should look at their strengths and hire to fill their weaknesses, making themselves obsolete in those areas."

"Being a COO means being accessible. It’s about serving your team and solving problems."

"In the water industry, patience is crucial. Progress is slow, but it's accelerating. Be ready for the long game."

"Focus on customer relationships. When you earn a customer, keep them by meeting all their water needs."

It's always worth paying attention to top-level consultants as crucial advisors to their usually enormous clients. They have their finger on the pulse of the practical needs of the market and are responsive when they see critical mass in an area. Sarah Brody runs the North American water practice of McKinsey, which she has restarted in response to considerable client demand from mega-cap corporates to private equity firms. The mainstreaming of water advice for major clients is a very interesting leading indicator of the increasing attention being paid to the fundamental molecule. Sarah is a proper intrapreneur and has done exceptional work building the business on behalf of her clients. She really elucidates the role that firms like McKinsey play in this sector, and she has an excellent water origin story. Please enjoy my conversation with Sarah Brody. 

Subscribe to The Fundamental Molecule here: https://www.burntislandventures.com/the-fundamental-molecule

For the full show notes, transcript, and links to mentioned content, check out the episode page here: https://podcasts.apple.com/us/podcast/the-fundamental-molecule/id1714287205

The idea of an Overton Window when the conditions around a political issue change that in turn changes the nature of what is politically possible, is a useful one in assessing businesses. Sometimes conditions change enough in a market or sector that there is suddenly a significant window of opportunity for a founder to run through. We think that is the case with Michael Rigney, CEO of Cala Systems. They're building a next generation heat pump water heater, and if they're right, they could save billions of gallons of water, reduce US national emissions by 3%, and save domestic energy consumers about $23 billion a year. We talk about the nature of the water heater market, competing against entrenched incumbents, and rebuilding a well known consumer product from the ground up. He has major game in this segment and Cala are in a fascinating position. Please enjoy my conversation with Michael Rigney.

Subscribe to The Fundamental Molecule here: https://www.burntislandventures.com/the-fundamental-molecule

For the full show notes, transcript, and links to mentioned content, check out the episode page here: https://podcasts.apple.com/us/podcast/the-fundamental-molecule/id1714287205

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Cala Systems CEO, Michael Rigney, shares insights on the future of water heating with his company’s next-generation heat pump technology. He explains how predictive control and intelligent design are set to revolutionize the industry by optimizing energy efficiency, cost savings, and user comfort. Rigney also discusses the importance of strategic partnerships, the role of branding, and the urgent need for decarbonizing residential water heating to reduce global emissions.

00:00 Introduction

00:50 Overton Window and Market Opportunities in Water Heating

01:47 Why Target the Water Heater Market

03:21 Recognizing a Unique Market Opportunity

05:40 Early Steps in Building Cala Systems

07:15 Building the World’s First Intelligent Heat Pump Water Heater

11:02 User Experience and Intelligent Water Heating

12:42 Customization and Integration with Home Systems

13:29 Branding Water Heaters: Lessons from Nest and Opower

15:37 Designing Cala Systems’ Website as a Brand Statement

17:29 The Impact of Decarbonizing Water Heating

20:17 Building a Strong Team

22:17 The Importance of Hiring Slowly and Thoughtfully

24:02 Practical Innovation: Balancing Thought and Scrappiness

25:48 Building the Company You Need for the Future

28:01 Balancing Customer and Installer Needs in Product Development

30:32 Geographic Focus for Early Deployment

35:24 Transitioning to Founder and CEO Role

36:44 Advice for Future Water Entrepreneurs

Links:

Burnt Island Ventures:  https://www.burntislandventures.com/

Michael Rigney: https://www.linkedin.com/in/michaeljrigney/

Cala Systems: https://www.calasystems.com/

It's nice to have friends in high places, and in water, there are few places higher than the presidency of the Water Environment Federation, the core trade body for the wastewater industry. Ifetayo Venner and I got to know each other in 2017 when we both spoke at the opening session of WEFTEC, WEF’s annual gathering for the wastewater world, and we spoke in a cavernous room filled with about 5000 pros talking through our stories of how we got into water. Ifetayo’s was a lot better than mine, and no surprise. She is an enormously accomplished professional, Past President of WEF and a Senior VP at Arcadis, the massive engineering consultancy. She has led the creation of some very serious projects in wastewater, and I wanted to have her on The Fundamental Molecule to help us understand the role of engineering consultancies in the sector, what the world looks like from her point of view, the opportunities in infrastructure renewal, and of course, her own path through all of it. She really is great. Please enjoy my conversation with Ifetayo Venner. 

Subscribe to The Fundamental Molecule here: https://www.burntislandventures.com/the-fundamental-molecule

For the full show notes, transcript, and links to mentioned content, check out the episode page here: https://podcasts.apple.com/us/podcast/the-fundamental-molecule/id1714287205

If I was to write a list of all the tricks we’re missing in water, it would be a lot, and somewhere near the very top would be lobbying - engagement with government on the federal and state level. I recognize we've made a lot of progress in the last five or six years in terms of securing capital for the required infrastructure renewal in the US, but there is a hell of a long way to go. But I look over the fence at energy, both legacy and renewables, healthcare, insurance, biotech, down to the gun lobby, and I can't help but think there is a massive gap between how effective we are in water and how effective we could be and how much more support for the fundamental molecule we would get if we were. Mae Stevens is a specialist lobbyist for water at Banner Public Affairs, and she recently joined us for our Founder Forum in DC alongside fellow lobbyist and longtime friend of BIV, Dan Kidera. She and he, they were both so good, and I wanted to have her on The Fundamental Molecule to help demystify this murky area of water at scale. Please enjoy my conversation with Mae Stevens. 

Subscribe to The Fundamental Molecule here: https://www.burntislandventures.com/the-fundamental-molecule

For the full show notes, transcript, and links to mentioned content, check out the episode page here: https://podcasts.apple.com/us/podcast/the-fundamental-molecule/id1714287205

Jorge Richardson - Water Access, Reliability, and Selfies with Bono

Sometimes businesses pop up that take a bit of time to make sense. HOPE Hydration is one of those businesses. When I first met Jorge Richardson in 2021, he was chock full of confidence, like a lot of entrepreneurs in 2021, with an admirably aggressive plan, but I couldn't quite see it. And, fortunately, I was wrong. Make no mistake, this is an exceptional early company with the potential to transform a very large legacy part of the water sector. Jorge is also exactly the right person to build it. A rare combination of smarts, charisma, and a down to earth way of looking at the journey that can only come from a very specific blend of experiences, both positive and negative. We think they can be a huge part of the solution to the public water access problem, and this is a fascinating look into the early stages of building that solution. Hopefully, you'll get it faster than I did because we are seriously excited. They were our second investment in BIV Fund 2. Please enjoy my conversation with Jorge Richardson. 

Subscribe to The Fundamental Molecule here: https://www.burntislandventures.com/the-fundamental-molecule

For the full show notes, transcript, and links to mentioned content, check out the episode page here: https://podcasts.apple.com/us/podcast/the-fundamental-molecule/id1714287205

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Jorge Richardson’s journey led him to create Hope Hydration, tackling the broken water access system with fresh ideas. In 2021, he pivoted to focus on event-based water stations, quickly learning how to make a big impact with limited resources. By combining a smart, ad-driven business model with B Corp principles, Hope Hydration is redefining what it means to offer free, high-quality water everywhere. For Jorge, success is all about having the right people, a clear mission, and staying true to your values.

00:00 Start

00:49 Introduction

01:53 Jorge's Unconventional Path to Water Sector

02:18 Mission and Vision of Hope Hydration

04:50 Problems with Traditional Water Access Models

08:00 Transforming Drinking Water Infrastructure

11:10 Key Learnings and Pivot from 2021 Onwards

16:46 Understanding the Ad Business Model in Water Tech

20:45 Balancing Ads with Mission as a B Corp

25:27 The Power of Networking and Partnerships

29:43 Scaling Across Multiple Vertical Markets

35:38 Building Sustainable Competitive Advantage

41:53 Global Impact and Scaling Hope Hydration

45:23 Advice for Future Water Entrepreneurs

Links:

Burnt Island Ventures: https://www.burntislandventures.com/

Jorge Richardson: https://www.linkedin.com/in/jorgerichardson/

HOPE Hydration: https://www.hopehydration.com/