Shift Direction or Sink: Adapting Your Startup for Financial Survival

Our multifamily billing startup was really hurting. It had been that way for nearly two and a half years. We just couldn’t find a repeatable way to attract more multifamily owner clients. That was compounded by the fact that our margins were razor-thin.

We charged $3.95 per utility bill delivered. Sometimes, to get the business, we lowered the price. You have to do a lot of volume to stretch that revenue number and be able to feed five owners.

All of our principals had previously worked together at a submetering and billing company. When we got out on our own, we were committed to making a difference and helping people conserve utilities, especially water.

We knew installing individual meters in apartment and condo units, that measured the tenant's actual water, electric, and gas usage and then billed them for it, reduced consumption. When an apartment complex is "master-metered" or only has one meter measuring consumption for all units, and the bills are divided up by unit size or occupancy, tenants use more water.

We cared about the water situation in Colorado. Conserving was even baked into our company name, American Conservation & Billing Solutions.

This name was a mouthful so we shortened it to "AmCoBi."

In order to serve what few tenants we had, we contracted with a software developer to build a Web-based portal where customers could log in, see their billing information, track their due dates, download copies of bills, and pay.

These systems are commonplace now, but in 2011 that wasn't the case.

As the airplane that represented our collective financial futures was plummeting earthward, we knew we had to do something else to generate revenue.

We started kicking around the idea of helping water utilities analyze their water conservation efforts, to determine which of their initiatives were saving water, and how much.

Water utilities in Colorado are required by the state to submit a water conservation plan, and then enact the measures in the plan.

Each of the plans employed different strategies like turf removal, smart irrigation controllers, xeriscaping, low-flow toilets, and much more. The common theme was that none of those options were measured for efficacy.

Even though there was a clear water shortage projected for Colorado's future, i.e. populations of consumers will eventually outplace supplies by a country mile, leaders at many utilities treated the water conservation planning as "heavy-handed government intervention" or overregulation.

They had a valid argument. They sell water to make money and to keep their utilities operating. Water conservation essentially equals loss of revenue. You can't keep cutting your sales and expect to remain in existence.

Many utilities did the minimum to meet the state conservation standards and got on with their business of selling and treating water.

The one area of water conservation that all utilities and their customers care about, is leaks. If a resident suffered from a broken sprinkler head or a frozen pipe that cracked, and their first notice was the several hundred dollar bill they received, you'd be amazed at how vocal they can be.

Utilities didn't really want to, but many offered leak forgiveness programs to customers if they could show they had fixed the problem. The water utility could have monetized the usage, but they ended up eating the bill instead. And they had to listen to a really pissed-off customer.

Water providers were highly motivated to stop leaks at the customer level, as well as leaks in the delivery system, which they would also pay for.

One inherent problem was that most water utilities read their meters every 30 or 60 days, using manual or drive-by Automated Meter Reading (AMR) systems. Suffer a leak on the 2nd day of the billing cycle in your basement during the winter, and 40 days could pass before you were alerted.

We were coming back from a sales call pitching our water conservation analytics services and recognized that if there was some way to reduce the time between read cycles, we could use our analytics tools to catch leaks earlier, and then alert the utility and the resident.

Advanced Metering Infrastructure (AMI) or "smart meter" systems were just starting to be deployed at water utilities. These systems report hourly data several times a day. They provide the information you need to quickly and accurately determine when a resident or commercial business has a leak.

AMI systems can run millions of dollars, however, and that was preventing smaller utilities from installing them.

We found a partner in one of the wealthiest communities in Colorado, just to our north. Several billionaires live in this gated community that has some of the largest, most expansive homes you can imagine. They have a PGA golf course running through the property, and their own water district serving about 1,700 customers.

The District's conservation coordinator at the time was fired up about helping her community save water. Many of the residences in the District are second and third homes. In the past and on several occasions, a pipe would freeze and burst inside a home, usually in the basement.

The leak would run for weeks and by the time it was noticed, significant property damage had occurred. In some of the worst cases, black mold infiltrated the home requiring costly mitigation efforts.

We pitched our idea of "a poor man's smart meter system." The conservation coordinator agreed to drive the meter reading route every 10 days and send us the data. Instead of getting a consumption value every 30 days, we could get three during that period.

We analyzed the data she sent and started flagging properties we suspected of having a problem. She drove to the properties to crosscheck our results.

We identified burst pipes, burst irrigation systems, broken toilet flappers where water was running continuously, and much more. She alerted the residents and helped them fix the problems.

We helped their District save hundreds of thousands of gallons of what would have been wasted water and prevented serious property damage.

The District staff were heroes to their customers and we had discovered a new business that would slowly start to turn the nose of our one-engine-working 737 away from the ground and pointed to level.

We subsequently repurposed the online portal we developed for billing, into a water usage and leak detection system called AquaHawk.

Every startup should be thinking of the fastest path they can blaze to earn revenue. This process should also include diversifying those revenue sources.

You're always up against the clock so keep those ideas flowing, take action on them, and evaluate. The opportunity that could turn things around for your business is probably right around the corner.

Ganbatte kudasai!

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