Rainwater, Inc ET CitySmart
Smart Irrigation for the Future
[Karen Cheng] [Eddy Fong] [Paras Gandhi] [Julia Pashin]
Background – Water Conservation

Austin Key Measures



Total Usage/Peak Day
Outdoor summer water use
Water Conservation Task force

Conservation initiatives


Goal: 1% water use reduction
Grant


$500,000
Solution for outdoor water use
BACKGROUND
STRATEGY
SOLUTION
TECHNOLOGY
IMPLEMENTATION
RISK
BOTTOM LINE
Background - Rainwater, Inc

4th: irrigation industry



Products: sprinkler/drip irrigation systems, basic
controllers
Develops, manufactures and markets
Goal: product differentiation


Pursue enhanced technology
Utilize strategic conservation strategy


Grant competition as launching pad
Assume

Existing research/production facilities
BACKGROUND
STRATEGY
SOLUTION
TECHNOLOGY
IMPLEMENTATION
RISK
BOTTOM LINE
Strategy
The Genesis Way
Current Technology
Competitive Environment
BACKGROUND
STRATEGY
SOLUTION
TECHNOLOGY
IMPLEMENTATION
RISK
BOTTOM LINE
Overall Strategy – The Genesis Way
Rainwater
Consumers
Rebates
BACKGROUND
STRATEGY
SOLUTION
TECHNOLOGY
City of
Austin
IMPLEMENTATION
RISK
BOTTOM LINE
Overall Strategy: Current Tech


Basic controllers – timer feature
ET ‘smart’ controllers:


Calculate optimal water need creates watering schedule
Methods to adjust original schedules



Solar/rain/soil moisture sensors
Real-time weather data
Proven successful


SWAT testing
Experimentation
BACKGROUND
STRATEGY
SOLUTION
TECHNOLOGY
IMPLEMENTATION
RISK
BOTTOM LINE
Data Source
Communication
Weather
matic
WeatherSet
Company
AccuWater
ET Water
Systems
HydroPoint
Data
Systems
Irrisoft, Inc.
Sensors
Weather
Stations
Broadband/
Satellite
Aqua
Conserve
Company
Overall Strategy – Competitive Environment
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•
•
Phone Line
Initial
Cost
After Rebate
Annual
Subscription
BACKGROUND
STRATEGY
$99-459
$349
$170-230
$400-600
$299
$480
$485
$0-359
$249
$70-130
$300-500
$199
$380
$385
-
-
-
$180
$48
$48
$100-350
SOLUTION
TECHNOLOGY
IMPLEMENTATION
RISK
BOTTOM LINE
Our Solution
The ET CitySmart
Competitive Environment
BACKGROUND
STRATEGY
SOLUTION
TECHNOLOGY
IMPLEMENTATION
RISK
BOTTOM LINE
Our Solution – The ET CitySmart

Expand into the smart controller market


Best available technology
Differentiate:


Utilize LCRA water usage data
Emphasize low cost to customers



Bigger rebates
Using phone line
Using minimal sensors
BACKGROUND
STRATEGY
SOLUTION
TECHNOLOGY
IMPLEMENTATION
RISK
BOTTOM LINE
Data Source
Communication
Weather
matic
WeatherSet
Company
AccuWater
ET Water
Systems
HydroPoint
Data
Systems
Irrisoft, Inc.
Rainwater,
Inc
Sensors
Weather
Stations
City Water
Info
Broadband/
Satellite
Aqua
Conserve
Company
Our Solution – Competitive Environment
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•
•
•
•
•
•
•
•
•
•
•
•
•
•
Cost
After Rebate
Annual
Subscription
BACKGROUND
STRATEGY
•
•
•
Phone Line
Initial
•
•
$99-459
$349
$170-230
$400-600
$299
$480
$485
$249
$0-359
$249
$70-130
$300-500
$199
$380
$385
$49
-
-
-
$180
$48
$48
$100-350
$36
SOLUTION
TECHNOLOGY
IMPLEMENTATION
RISK
BOTTOM LINE
Technology
ET
Healthy Range
How It Works
Database
NRE Costs
BACKGROUND
STRATEGY
SOLUTION
TECHNOLOGY
IMPLEMENTATION
RISK
BOTTOM LINE
Technology - ET

Current ET algorithms combine




Sensors
Weather forecasts
Landscape information
Calculates optimal level of
water needed
BACKGROUND
STRATEGY
SOLUTION
TECHNOLOGY
IMPLEMENTATION
RISK
BOTTOM LINE
Rainware ET CitySmart
BACKGROUND
Customize your Water Zone
STRATEGY
SOLUTION
TECHNOLOGY
IMPLEMENTATION
RISK
BOTTOM LINE
1. Data is collected at home
1
Solar
Sensor
Homeowner Profile
City Water Data
2
Weather Forecast
Rainwater
Servers
3
4
BACKGROUND
STRATEGY
SOLUTION
TECHNOLOGY
IMPLEMENTATION
RISK
BOTTOM LINE
1. Data is collected at home
2. ET CitySmart sends data to servers
1
Solar
Sensor
Homeowner Profile
City Water Data
2
Weather Forecast
Rainwater
Servers
3
4
BACKGROUND
STRATEGY
SOLUTION
TECHNOLOGY
IMPLEMENTATION
RISK
BOTTOM LINE
1. Data is collected at home
2. ET CitySmart sends data to servers
1
Solar
Sensor
3. Rainwater servers are updated hourly
Homeowner Profile
City Water Data
2
Weather Forecast
Rainwater
Servers
3
4
BACKGROUND
STRATEGY
SOLUTION
TECHNOLOGY
IMPLEMENTATION
RISK
BOTTOM LINE
1. Data is collected at home
2. ET CitySmart sends data to servers
1
Solar
Sensor
3. Rainwater servers are updated hourly
4. Rainwater sends customized water
schedule to household
Homeowner Profile
City Water Data
2
Weather Forecast
Rainwater
Servers
3
4
BACKGROUND
STRATEGY
SOLUTION
TECHNOLOGY
IMPLEMENTATION
RISK
BOTTOM LINE
Technology: Database
tblCustomer
PK
CustomerID
FK1
ZipCode
LocationID
Username
Password
Subscription
Algorithm
tblZone
PK
ZoneID
FK1
PlantType
GrassType
SoilType
LandSlope
SunnyType
CustomerID
tblSensor
PK
SensorID
Sensor
Time
RadiationIndex
tblLocation
PK,FK1
tblAlgorithm
ZipCode
City
State
PK
PenmanID
FK4
FK2
FK1
CustomerID
Forecast ID
SensorID
Air Density
Irradiance
Heat capacity
Conductance
Vapor Pressure
Latent Heat
LakeID
tblZipMaster
PK
ZipCode
City
State
BACKGROUND
STRATEGY
FK3
tblForecast
PK
Forecast ID
Temperature
Humidity
Wind
UV Radiation
tbWaterLevel
PK
LakeID
LakeTravis
LakeAustin
LakeBuchanan
SOLUTION
TECHNOLOGY
IMPLEMENTATION
RISK
BOTTOM LINE
Plant Watering Levels
underwater
Jan
Feb
BACKGROUND
Mar
Apr
STRATEGY
May
SOLUTION
optimum level
Jun
Jul
TECHNOLOGY
overwater
Aug
Sep
IMPLEMENTATION
Oct
RISK
Nov
Dec
BOTTOM LINE
Plant Watering Levels
underwater
Jan
Feb
BACKGROUND
Mar
Apr
STRATEGY
May
SOLUTION
optimum level
Jun
Jul
TECHNOLOGY
overwater
Aug
Sep
IMPLEMENTATION
Oct
RISK
Nov
Dec
BOTTOM LINE
Technology - NRE Costs






Software engineering:
 Algorithm revisions $115,000
 Web interface $65,000
Mechanical engineering:

Engineering/Circuit Development $85,000

Prototype Development $35,000
Testing: $37,500
IBM Server: $17,500
LCRA Link: $25,000
Training: $112,500
BACKGROUND
STRATEGY
SOLUTION
Total NRE:
$492,500
TECHNOLOGY
IMPLEMENTATION
RISK
BOTTOM LINE
Implementation
Timeline
Partnerships
Marketing/Distribution
Sustainability
Scalability
BACKGROUND
STRATEGY
SOLUTION
TECHNOLOGY
IMPLEMENTATION
RISK
BOTTOM LINE
Implementation - Timeline
Months
2
4
6
8
10
15
20
25
30
35
Partner with
LCRA/Austin
R&D: Design, Build
and Test Prototype
Manufacture
Controllers
Sell Controllers
Target High-Water
Users
Widespread
Advertising
Year 1
BACKGROUND
STRATEGY
SOLUTION
TECHNOLOGY
Year 2
IMPLEMENTATION
Year 3
RISK
BOTTOM LINE
Implementation – Partnerships

Partner with the City of Austin



City provides:
 $200 rebates
 Utilities bill mailings
 Access to usage database
Rainwater provides:
 Water consumption decrease of over 1% by 2011
Partner with Home Builders/Landscapers/Irrigators

Target new homes
BACKGROUND
STRATEGY
SOLUTION
TECHNOLOGY
IMPLEMENTATION
RISK
BOTTOM LINE
Implementation - Marketing

Marketing

High vs. General users




High users consume over 25,000 gallons a month
Target High users initially
Extend advertising to general public after 2 years
Pricing



Controller: $249
After rebate: $49
Annual subscription fee: $36
BACKGROUND
STRATEGY
SOLUTION
TECHNOLOGY
IMPLEMENTATION
RISK
BOTTOM LINE
Implementation - Distribution

Sales Channels




BACKGROUND
STRATEGY
SOLUTION
TECHNOLOGY
Hardware stores
Website
Landscapers
Irrigation Installers
IMPLEMENTATION
RISK
BOTTOM LINE
Implementation - Sustainability

Short-Term



Low price
Quickly and aggressively penetrate market
Long-Term


New Homes: Maintain home builders partnership
Communication: Include broadband/wireless
BACKGROUND
STRATEGY
SOLUTION
TECHNOLOGY
IMPLEMENTATION
RISK
BOTTOM LINE
Implementation - Scalability

Expand into other cities






Las Virgenes, CA (76.2% outdoor)
Scottsdale/Tempe, AZ (66.5%)
Walnut, CA (63.9%)
San Diego, CA (62.8%)
Denver, CO (59.7%)
Phoenix, AZ (58.7%)
BACKGROUND
STRATEGY
SOLUTION
TECHNOLOGY
IMPLEMENTATION
RISK
BOTTOM LINE
Risk Analysis
City of Austin Partnership
LCRA Partnership
Price Match
BACKGROUND
STRATEGY
SOLUTION
TECHNOLOGY
IMPLEMENTATION
RISK
BOTTOM LINE
Risk Analysis


No City of Austin Partnership
 Unlikely because Rainwater saves water and
money for Austin
 Marketing
 Rebates
Contingency (No Partnership)
 Higher Prices = Lower Market Share (3%)
 2008: 151% ROI
 2011: 254% ROI
BACKGROUND
STRATEGY
SOLUTION
TECHNOLOGY
IMPLEMENTATION
RISK
BOTTOM LINE
Risk Analysis

No LCRA Partnership - minimal risk
 LCRA statistics are a core component
 Publicly available

Competitors Price-Match
 Low price is competitive advantage
 City Partnership: Cost below Manufacture
 No Partnership: Cost still below Manufacture
BACKGROUND
STRATEGY
SOLUTION
TECHNOLOGY
IMPLEMENTATION
RISK
BOTTOM LINE
Bottom Line
Rainwater
City of Austin
Consumers
BACKGROUND
STRATEGY
SOLUTION
TECHNOLOGY
IMPLEMENTATION
RISK
BOTTOM LINE
Bottom Line: Rainwater
Year
ROI
2008
271%
2009
306%
2010
351%
2011
410%
Net Income 2011: $2,000,000
Cash Flows 2011: $1,300,000
BACKGROUND
STRATEGY
SOLUTION
TECHNOLOGY
IMPLEMENTATION
RISK
BOTTOM LINE
Bottom Line: City of Austin
Year Total Water Saved
2008
2009
2010
2011
BACKGROUND
STRATEGY
0.78%
0.86%
0.97%
1.11%
SOLUTION
TECHNOLOGY
IMPLEMENTATION
RISK
BOTTOM LINE
Bottom Line: Consumers
Consumer
Years to Break Even
High
1.01
General
1.55
BACKGROUND
STRATEGY
SOLUTION
TECHNOLOGY
IMPLEMENTATION
RISK
BOTTOM LINE
The Genesis Result
Rainwater
City of Austin
Consumers
BACKGROUND
STRATEGY
SOLUTION
TECHNOLOGY
IMPLEMENTATION
RISK
BOTTOM LINE
The Genesis Result
Rainwater
Consumers
Rebates
BACKGROUND
STRATEGY
SOLUTION
TECHNOLOGY
City of
Austin
IMPLEMENTATION
RISK
BOTTOM LINE
The Genesis Result
2011 ROI:
410%
Consumers
Rebates
BACKGROUND
STRATEGY
SOLUTION
TECHNOLOGY
City of
Austin
IMPLEMENTATION
RISK
BOTTOM LINE
The Genesis Result
2011 ROI:
410%
Consumers
Rebates
BACKGROUND
STRATEGY
SOLUTION
TECHNOLOGY
1.11% by
2011
IMPLEMENTATION
RISK
BOTTOM LINE
The Genesis Result
2011 ROI:
410%
1.5 years to
break even
BACKGROUND
STRATEGY
SOLUTION
Rebates
TECHNOLOGY
1.11% by
2011
IMPLEMENTATION
RISK
BOTTOM LINE
Thank you.
Appendices
BACKGROUND
STRATEGY
SOLUTION
TECHNOLOGY
IMPLEMENTATION
RISK
BOTTOM LINE
Appendix: Rainwater Projected Financials
Income Statement
Operating Revenue
Total Revenue
Controller Sales
Subscription Sales
Total Operational Expenses
Cost of Goods Sold
Maintenance
Net Income
Free Cash Flow
Valuation
Discounted Cash Flows
Low
Mid
High
ROI: Ave rage (525.31%)
Net Income
Investment Capital
2007
2008
2009
2010
2011
2012
4,258,199
3,720,321
537,878
2,612,193
2,477,724
134,469
625,432
510,432
7,622,657
3,720,321
537,878
4,676,121
2,477,724
134,469
1,336,774
1,344,774
8,582,640
6,659,795
962,862
5,265,023
4,993,992
271,031
1,507,566
1,512,066
9,837,635
7,498,517
1,084,123
6,034,900
5,724,238
310,662
1,729,594
1,731,094
11,475,705
8,594,987
1,242,649
7,039,775
6,677,384
362,391
2,018,348
2,019,098
13,619,329
10,026,142
1,449,563
8,354,781
7,924,697
430,084
2,395,369
2,395,619
2007
472,623
464,030
455,743
2007
205.06%
625,432
305,000
2008
2009
1,152,927 1,200,326
1,111,383 1,136,037
1,072,045 1,076,258
2008
2009
438.29% 494.28%
1,336,774 1,507,566
305,000
305,000
2010
1,272,406
1,182,361
1,100,142
2010
567.08%
1,729,594
305,000
2011
1,374,164
1,253,701
1,145,691
Total
52,253,961
40,156,522
32,995,775
2011
661.75%
2,018,348
305,000
2012
785.37%
2,395,369
305,000
Appendix: Water Conservation and Costs
Total Saved
Water Saved
Austin M uncipal Water
Demand Projections
% of Total Austin Water Saved
Govt Costs
New Buyers
Cost to Govt
Existing Govt Budget
Watered Saved by RW
H20 Cost Saving for Govt
Water Facility Savings
Net Costs to Govt
% of Budget
2007
208,616,295
2008
378,193,307
2009
426,039,510
2010
488,585,695
2011
570,229,810
2012
677,089,762
47,588,476,467 48,455,586,097 49,338,495,331 50,237,492,055 51,152,869,398 52,084,925,831
0.44%
0.78%
0.86%
0.97%
1.11%
1.30%
2007
14,941
2,988,210
2008
4,017
803,410
2009
4,071
814,210
2010
4,126
825,189
2011
4,181
836,249
2012
4,237
847,490
6,200,000
208,616,295
36,813
62,688
6,200,000
378,193,307
66,736
111,611
6,200,000
426,039,510
75,179
123,481
6,200,000
488,585,695
86,216
139,075
6,200,000
570,229,810
100,623
159,410
6,200,000
677,089,762
119,480
185,896
2,888,709
46.59%
625,063
10.08%
615,550
9.93%
599,898
9.68%
576,215
9.29%
542,114
8.74%
Appendix: Consumer Costs and Savings
Consumer Costs
Initial Costs
Rebates
Cost to Consumer
Net Savings
High
Regular
249
200
49
Monthly
Consumer Breakeven
Months
Time
High
Regular
Yearly
4.04
2.63
48.50
31.60
Years
12
19
1.01
1.55
Appendix – Water Assumptions




-Percent Households – High Water vs. General:
normalized distribution graph of water use by frequency
(16,000 household sample); sample from Austin Green
Building Program Database March 2001-2003
- Average Water Use –180 gallons per day (TWDB Water
Use Survey X 3 ppl per household (US Census data) X %
High Use/General
 water use growth rate equal to household growth rate
-58% Outdoor Water Use – given in case
-12% Outdoor Water Saved - Study
Appendix – Market Assumptions


Number of Austin households: City of Austin data for
2005 and 2010, annualized for growth rate)
Market penetration estimates
 General: 5%, 9, 10, 11, 12; growth rate in teens
 High: 5%, 9, 10, 11, 12, 15; growth rate in teens
Appendix – Product Cost/Price Assumptions

Product cost: $165


cost comparison of competitor products (based on 80%
mark-ups)
closest product from ET Water


save about $30 from using only a phone line (no broadband)
for internet access
Selling price: $249; 50% markup of cost
Appendix – City Cost Assumptions

Amount of rebate: $200: existing rebate is $100 for
replacing residential controllers with smart
controller equivalents


Justification: cost analysis to city of Austin: percent of
water conservation budget that will go toward rebates
net of savings in water bought (under 10% after 2007)
cost of gallon by acre-foot: $57.50 (LCRA website – rate
for pre-bought water)


1 acre foot ~ 281K gallons
Austin water conservation budget:

Austin Statesman article: With conservation, city could
delay $330 million water plant, 2/12/2007
Appendix: Rainwater Assumptions

Rainwater has existing, and the new
product will make use of:
 Research facilities
 Production facilities
 Labor
 Website
Sources

Irrigation Controller Report for Orange County


Water Conservation Task Force – City of Austin




Water Use Survey 2004, Water for Texas 2007
http://www.twdb.state.tx.us/home/index.asp
Smart controller company websites:





2007 Water Conservation Strategies Summary, rebate info.
http://www.ci.austin.tx.us/watercon/taskforce.htm
Texas Water Development Board


US Department of the Interior – Bureau of Reclamation
http://www.accuwater.com/app
http://www.weathertrak.com/
http://www.irritrol.com/
http://www.etwater.com/public/index.html
Irrigation Association – conservation and SWAT industry info

http://www.irrigation.org/SWAT/Industry/