Your Water Tech Is Not Disruptive!

... and even if it were, you should never market it like that: here's why.

By definition, disruptive tech creates a new category. Google disrupted Yahoo and the search engine space was created next to the existing web directories. Apple disrupted Blackberry, and the smartphone category was born.

But, sorry to crack your bubble, you're not Google, Apple, Hubspot, or Netflix.

As popular as "Blue Ocean Strategies" may be, I respectfully believe it to be terrible advice to give to growth-stage water tech companies.

So, what to do instead?

Play it like Pepsodent:

When Pepsodent launched, the "toothpaste" category already existed. But it was made out of charcoal and sold in jars, so Pepsodent changed that: they made it mint-fresh and sold it in tubes.

They created a sub-category: toothpaste that gives a fresh sensation.

?? Yeah, but come on, my water tech changes the World; it's not stupid toothpaste!

I hear you. But there are many water tech examples that successfully apply the same:

• Membrane Aerated Biofilm Reactors (MABRs) created a sub-category of biological wastewater treatment, one that generates less sludge while using less energy
• Thermal Hydrolysis of Sludge enhanced the anaerobic digestion category (and even bettered the already existing sludge pre-treatment category)
• Digital Lab Services made the analytics category easier and more accessible to smaller market players

Just to name a few.

But what should you do in concrete steps?

Consider me stupid, but I like simple frameworks.

To me, a water tech can be (truly) disruptive across the four following dimensions:

1. It Creates a Market (e.g., online measurement of parameters that were only possible in the lab before)
2. It Improves Performance (e.g., 20% better elimination of a pollutant or 30% lower specific energy consumption)
3. It Cuts Costs (self-explanatory, right? I'd integrate business model innovation here as well)
4. It Enhances User-Experience (e.g., process automation, digital twins...)

My rule of thumb is that the earlier you are in your company's path, the fewer of these dimensions you're allowed to touch.

?? And more than two at once should be avoided at all costs.

(I'll give you my simple trick to stick to that rule in a future release; subscribe if that's of interest!)

?? This week on the Podcast: Water.org

So, now that I've told you why, disruption and creating a category is a terrible idea that's God-mode hard on top of it... it's time to talk about someone who (very) successfully did the (absolute) opposite of what I preached so far. ??

Within the past 20 years, Gary White created the category of "for profit" philanthropic capital (through WaterEquity), and disrupted the traditional approach to water development (through WaterCredit).

In doing so, he broke all four walls of my rule of thumb:

1. He created a market (aka, the 2.1 billion people that don't have access to water)
2. He improved performance, by enabling 66 million people to get access to water - which is orders of magnitude more than "traditional" approaches
3. He cut costs, as WaterCredit is 10x less expensive to deploy than classic top-down approaches (according to my own, simple, stupid, calculation, it would require $175 Billion for universal access "the Water dot org way" against $1.7 Trillion "the World Bank way")
4. He enhanced customer experience, as for an average of $377 per loan, some of the poorest people on Earth could regain control of their destiny

True.

But there's a but: I genuinely believe he's simply the best water entrepreneur . So he can afford to go against my rule of thumb!

(and there's a lot to learn from him for us mere mortals ??)

?? Snacking Content

?? Xylem just committed $50 Million more to its Corporate Venture Investing Plans (on top of the $20 Million they already invested in Burnt Island Ventures ). I'll have the Xylem Innovation Labs back on the podcast in a couple of months, if you can't wait, check my conversation with Sivan Zamir ??? or the one with Max Storto !

?? First Momentum Ventures just published their first Deep Tech Hardware Napkin , which looks into Pre-Seed to Series B valuation, facts, and figures. The data sample is slightly limited (109 investment rounds), and slightly out of focus for Water Tech, but the principle is interesting (it's now on my to-do for our sector; subscribe if you don't want to miss it ??) and there's wisdom to extract from their work!

I was especially intrigued by this chart:

According to First Momentum's data, a founding team with higher experience raises less money across all stages. Counter-intuitive, right?

?? Another key learning in the Napkin paper is the importance of non-dilutive funding in a company's growth path. So kudos to Saltworks Technologies: Industrial Water + Lithium , which just landed $4.9 million from Natural Resources Canada to advance the innovation of next-generation lithium refining technologies!

The perfect timing for a refresher as to why water tech matters in lithium mining ?

?? If you missed it, the World Economic Forum published this community paper last month on Investing in Water.

One remarkable quote:

"Out of $53 billion invested in climate tech in Europe in 2021, a mere $455 million – less than 1% – went towards water tech."

If you already follow Gaetane Suzenet , this kind of figure will sound familiar. But if that's the first time you look into the topic, the report is a good entry door! (Gaetane was on my mic' a while ago )

?? I'm still catching up on the brilliant Fundamental Molecule podcast (yes, I'm a Tom Ferguson fanboy. Blame me!). I'm late, so I won't recommend the last one, which I haven't listened to yet (blame me, I said!), but I had great fun listening to Reinhard Huebner on Tom's mic .

That's it for this week - if any of this is of interest to you, make sure to subscribe! I'll return next Wednesday with some thoughts on radical decentralization ??