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Rainwater, Inc ET CitySmart Smart Irrigation for the Future [Karen Cheng] [Eddy Fong] [Paras Gandhi] [Julia Pashin]
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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 STRATEGYSOLUTIONTECHNOLOGYIMPLEMENTATIONRISKBOTTOM LINEBACKGROUND
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Background - Rainwater, Inc 4 th : 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 STRATEGYSOLUTIONTECHNOLOGYIMPLEMENTATIONRISKBOTTOM LINE BACKGROUND
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Strategy The Genesis Way Current Technology Competitive Environment SOLUTIONTECHNOLOGYIMPLEMENTATIONRISKBOTTOM LINEBACKGROUND STRATEGY
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Overall Strategy – The Genesis Way Rainwater City of Austin Consumers Grant & Partnership Utility Savings Rebates SOLUTIONTECHNOLOGYIMPLEMENTATIONRISKBOTTOM LINEBACKGROUND STRATEGY
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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 SOLUTIONTECHNOLOGYIMPLEMENTATIONRISKBOTTOM LINEBACKGROUND STRATEGY
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Overall Strategy – Competitive Environment Company Aqua Conserve Weather matic WeatherSet Company AccuWater ET Water Systems HydroPoint Data Systems Irrisoft, Inc. Data Source Sensors Weather Stations Communication Broadband/ Satellite Phone Line Cost Initial $99-459$349$170-230$400-600$299$480$485 After Rebate $0-359 $249 $70-130 $300-500 $199 $380 $385 Annual Subscription ---$180$48 $100-350 SOLUTIONTECHNOLOGYIMPLEMENTATIONRISKBOTTOM LINEBACKGROUND STRATEGY
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Our Solution The ET CitySmart Competitive Environment STRATEGYSOLUTIONTECHNOLOGYIMPLEMENTATIONRISKBOTTOM LINEBACKGROUND
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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 STRATEGYSOLUTIONTECHNOLOGYIMPLEMENTATIONRISKBOTTOM LINEBACKGROUND
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Our Solution – Competitive Environment Company Aqua Conserve Weather matic WeatherSet Company AccuWater ET Water Systems HydroPoint Data Systems Irrisoft, Inc. Rainwater, Inc Data Source Sensors Weather Stations City Water Info Communication Broadband/ Satellite Phone Line Cost Initial $99-459$349$170-230$400-600$299$480$485$249 After Rebate $0-359 $249 $70-130 $300-500 $199 $380 $385 $49 Annual Subscription ---$180$48 $100-350$36 STRATEGYTECHNOLOGYIMPLEMENTATIONRISKBOTTOM LINEBACKGROUND SOLUTION
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Technology ET Healthy Range How It Works Database NRE Costs STRATEGYSOLUTIONTECHNOLOGYIMPLEMENTATIONRISKBOTTOM LINEBACKGROUND
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Current ET algorithms combine Sensors Weather forecasts Landscape information Calculates optimal level of water needed Technology - ET STRATEGYSOLUTIONTECHNOLOGYIMPLEMENTATIONRISKBOTTOM LINEBACKGROUND
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Customize your Water Zone Rainware ET CitySmart STRATEGYSOLUTIONIMPLEMENTATIONRISKBOTTOM LINEBACKGROUND TECHNOLOGY
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1 1 2 2 3 3 4 4 Solar Sensor Homeowner Profile Rainwater Servers City Water Data Weather Forecast 1. Data is collected at home STRATEGYSOLUTIONIMPLEMENTATIONRISKBOTTOM LINEBACKGROUND TECHNOLOGY
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1 1 2 2 3 3 4 4 1. Data is collected at home 2. ET CitySmart sends data to servers STRATEGYSOLUTIONIMPLEMENTATIONRISKBOTTOM LINEBACKGROUND TECHNOLOGY Solar Sensor Homeowner Profile Rainwater Servers City Water Data Weather Forecast
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1 1 2 2 3 3 4 4 1. Data is collected at home 2. ET CitySmart sends data to servers 3. Rainwater servers are updated hourly STRATEGYSOLUTIONIMPLEMENTATIONRISKBOTTOM LINEBACKGROUND TECHNOLOGY Solar Sensor Homeowner Profile Rainwater Servers City Water Data Weather Forecast
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1 1 2 2 3 3 4 4 1. Data is collected at home 2. ET CitySmart sends data to servers 3. Rainwater servers are updated hourly 4. Rainwater sends customized water schedule to household STRATEGYSOLUTIONIMPLEMENTATIONRISKBOTTOM LINEBACKGROUND TECHNOLOGY Solar Sensor Homeowner Profile Rainwater Servers City Water Data Weather Forecast
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Technology: Database STRATEGYSOLUTIONIMPLEMENTATIONRISKBOTTOM LINEBACKGROUND TECHNOLOGY
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STRATEGYSOLUTIONIMPLEMENTATIONRISKBOTTOM LINEBACKGROUND TECHNOLOGY
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STRATEGYSOLUTIONIMPLEMENTATIONRISKBOTTOM LINEBACKGROUND TECHNOLOGY
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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 Technology - NRE Costs STRATEGYSOLUTIONIMPLEMENTATIONRISKBOTTOM LINEBACKGROUND TECHNOLOGY Total NRE: $492,500
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Implementation Timeline Partnerships Marketing/Distribution Sustainability Scalability STRATEGYSOLUTIONTECHNOLOGYIMPLEMENTATIONRISKBOTTOM LINEBACKGROUND
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Implementation - Timeline Partner with LCRA/Austin R&D: Design, Build and Test Prototype Manufacture Controllers Sell Controllers Target High-Water Users Widespread Advertising 24681020253035 15Months Year 1Year 2Year 3 STRATEGYSOLUTIONTECHNOLOGYIMPLEMENTATIONRISKBOTTOM LINEBACKGROUND
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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 STRATEGYSOLUTIONTECHNOLOGYRISKBOTTOM LINEBACKGROUND IMPLEMENTATION
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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 STRATEGYSOLUTIONTECHNOLOGYRISKBOTTOM LINEBACKGROUND IMPLEMENTATION
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Implementation - Distribution Sales Channels Hardware stores Website Landscapers Irrigation Installers STRATEGYSOLUTIONTECHNOLOGYRISKBOTTOM LINEBACKGROUND IMPLEMENTATION
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Implementation - Sustainability STRATEGYSOLUTIONTECHNOLOGYRISKBOTTOM LINEBACKGROUND IMPLEMENTATION Short-Term Low price Quickly and aggressively penetrate market Long-Term New Homes: Maintain home builders partnership Communication: Include broadband/wireless
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Implementation - Scalability STRATEGYSOLUTIONTECHNOLOGYRISKBOTTOM LINEBACKGROUND IMPLEMENTATION 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%)
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Risk Analysis City of Austin Partnership LCRA Partnership Price Match STRATEGYSOLUTIONTECHNOLOGYIMPLEMENTATIONRISKBOTTOM LINEBACKGROUND
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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 STRATEGYSOLUTIONTECHNOLOGYIMPLEMENTATIONRISKBOTTOM LINEBACKGROUND
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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 STRATEGYSOLUTIONTECHNOLOGYIMPLEMENTATIONBOTTOM LINEBACKGROUND RISK
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Bottom Line Rainwater City of Austin Consumers STRATEGYSOLUTIONTECHNOLOGYIMPLEMENTATIONRISKBOTTOM LINEBACKGROUND
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Net Income 2011: $2,000,000 Cash Flows 2011: $1,300,000 Bottom Line: Rainwater STRATEGYSOLUTIONTECHNOLOGYIMPLEMENTATIONRISKBOTTOM LINEBACKGROUND YearROI 2008271% 2009306% 2010351% 2011410%
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Bottom Line: City of Austin STRATEGYSOLUTIONTECHNOLOGYIMPLEMENTATIONRISKBACKGROUND YearTotal Water Saved 20080.78% 20090.86% 20100.97% 20111.11% BOTTOM LINE
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Bottom Line: Consumers STRATEGYSOLUTIONTECHNOLOGYIMPLEMENTATIONRISKBACKGROUND ConsumerYears to Break Even High1.01 General1.55 BOTTOM LINE
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The Genesis Result Rainwater City of Austin Consumers STRATEGYSOLUTIONTECHNOLOGYIMPLEMENTATIONRISKBOTTOM LINEBACKGROUND
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The Genesis Result Rainwater City of Austin Consumers Grant & Partnership Utility Savings Rebates STRATEGYSOLUTIONTECHNOLOGYIMPLEMENTATIONRISKBACKGROUND BOTTOM LINE
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The Genesis Result 2011 ROI: 410% City of Austin Consumers Utility Savings Rebates STRATEGYSOLUTIONTECHNOLOGYIMPLEMENTATIONRISKBACKGROUND Grant & Partnership BOTTOM LINE
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The Genesis Result 2011 ROI: 410% 1.11% by 2011 Consumers Utility Savings Rebates STRATEGYSOLUTIONTECHNOLOGYIMPLEMENTATIONRISKBACKGROUND Grant & Partnership BOTTOM LINE
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The Genesis Result 2011 ROI: 410% 1.11% by 2011 1.5 years to break even Utility Savings Rebates STRATEGYSOLUTIONTECHNOLOGYIMPLEMENTATIONRISKBACKGROUND Grant & Partnership BOTTOM LINE
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Thank you.
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Appendices STRATEGYSOLUTIONTECHNOLOGYIMPLEMENTATIONRISKBOTTOM LINEBACKGROUND
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Appendix: Rainwater Projected Financials
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Appendix: Water Conservation and Costs
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Appendix: Consumer Costs and Savings
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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
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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
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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
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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
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Appendix: Rainwater Assumptions Rainwater has existing, and the new product will make use of: Research facilities Production facilities Labor Website
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Sources Irrigation Controller Report for Orange County US Department of the Interior – Bureau of Reclamation Water Conservation Task Force – City of Austin 2007 Water Conservation Strategies Summary, rebate info. http://www.ci.austin.tx.us/watercon/taskforce.htm http://www.ci.austin.tx.us/watercon/taskforce.htm Texas Water Development Board Water Use Survey 2004, Water for Texas 2007 http://www.twdb.state.tx.us/home/index.asp http://www.twdb.state.tx.us/home/index.asp Smart controller company websites: http://www.accuwater.com/app http://www.accuwater.com/app http://www.weathertrak.com/ http://www.weathertrak.com/ http://www.irritrol.com/ http://www.irritrol.com/ http://www.etwater.com/public/index.html http://www.etwater.com/public/index.html Irrigation Association – conservation and SWAT industry info http://www.irrigation.org/SWAT/Industry/ http://www.irrigation.org/SWAT/Industry/
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