with 🎙️ Paul Gagliardo, Judge and advisor at Imagine H2O, and Principal at Gagliacqua.
💧 Paul also runs the Water Entrepreneur, an incredibly good water podcast that is one of my personal favorites and which also turns out to be a family business as Paul will elaborate on later on in the conversation.
What we covered:
🚽 How leading the project that infamously popularized the term “toilet to tap” made Paul famous and what his job was in San Diego
👨🔬 How Paul led a research center that tested equipment, gave a brutally honest feedback and assessment and how he rapidly got praised for that
🈂️ How becoming a consultant engineer, one of his first duties was to translate what utilities said so that his colleagues could understand it
🏰 How the water sector used to be extremely conservative and somewhat trapped in the 19th century and how things drastically changed over the last decade
🧑 How the startup founder is almost as important as the technology and the market the company aims for, why, and what to do now that you’re aware of that
🚧 How some inventors believe in their technology despite the fundamental laws of physics and how to overcome their harassing demands
⚖️ Defining a set of rules to check and assess technology in the most effective manner and how despite all precautions taken to make it a science, there is still some subjectivity in it
🧑⚖️ How the more disruptive your technology is, the more people will want to compare it to things they know and understand to better assess the value you’re delivering
📊 How you need to think of data collection from the onset when piloting and how there are a set of best practices that support your efforts in this endeavor
🤌 How expertise can be tricky: the more expertise someone has, the less likely that person is to look at something new because they think they already know everything
0️⃣ Startups having zero experience in the water business, getting paid as a utility and having to figure out what to do with the money, how founders have to be prepared to be replaced when the company grows, being an open book, being smarter than everybody else, seeing the future… and much more!
🔥 … and of course, we concluded with the 𝙧𝙖𝙥𝙞𝙙 𝙛𝙞𝙧𝙚 𝙦𝙪𝙚𝙨𝙩𝙞𝙤𝙣𝙨 🔥
Resources:
🔗 Send your warmest regards to Paul on LinkedIn
🔗 Check out the Water Entrepreneur Podcast’s Website
is on Linkedin ➡️
Full Transcript:
These are computer-generated, so expect some typos 🙂
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Antoine Walter: Hi Paul. Welcome to the show.
Paul Gagliardo: Hi Antwan. Thanks for having me.
Antoine Walter: I have to thank you for having you because I’m really happy to have you today to explore a bit with you, your word, which led you at some point to become a fellow podcaster. But that’s a story which I like to take for the end because before that I like to understand your path and to understand you a bit better.
And that starts with my tradition on that microphone, which is to open with the postcard. So what can you tell me about Anita, which I would ignore by now?
Paul Gagliardo: So Encinas is a little coastal town just north of San Diego. Probably our biggest claim to fame is there’s a surf beach called Swamis. and it was memorialized in a Beach Boy song. I forget the name of the song right now, but it talks about all the surf spots all the way from Northern California down to San Diego. And Encinitas is mentioned, and I live about half a kilometer from Swami.
So that’s considered my home beach even though I don’t surf. But I sit up the top, it is about a hundred foot cliff overlooks the beach and you sit up top on the bench and you watch all the surfers and you talk about the surf and you know, it’s very nice.
Antoine Walter: I was gonna ask you if you’re surfing, you answered the question before, cause I had Ari Goldfarb on that microphone, the CEO and founder of Kando, and he’s a surfer, so I thought maybe that’s a link you have to him.
Paul Gagliardo: I’m a runner, so I run, have, run every day for the past 42 years. I think my legs are a little bit wearing out now, but yeah, I grew up in New York, so in New York there’s not a lot of swimmers and there’s not a lot of surfing. I, I do out to San Diego in 1978 and never looked back, but I still have kept my New Yorker roots.
I.
Antoine Walter: So talking of San Diego, that’s where your professional career in the water industry starts, and that’s also the first of the three legs in your journey, if I can picture it that way. You’ve been with a utility, you’ve been with a big water company, and now you are really active in the startup ecosystem. I read a lot of stuff about what you did in San Diego, and there’s so much I didn’t know which one to pick, so I won’t do it myself. I will let you pick what is the most prominent, or if there are more than one of your story with San Diego.
Paul Gagliardo: So I’d have to say what really I’ll say made me famous was back in the mid nineties, early nineties, San Diego was working on a project to make sewage into drinking water. and back at that point in time, I mean, now there are a few projects around the world that have been completed, but at that point in time that was not a very popular thing to even think about.
So my job though, was as the researcher I ran a research center that tested all the equipment to document that you could safely treat wastewater and make it into sewage. There was a I think it was one of the newspapers coined the term toilet to tap.
So,
Antoine Walter: infamous one,
Paul Gagliardo: Very famous and it’s stuck.
And that from a PR perspective, that was a little bit hard to overcome. But anyway.
So what we did a lot of research work back then and testing different kinds of equipment treatment equipment, monitoring equipment. And I felt because we were spending public money, cuz I worked for a city that the data should be open source.
And so for about five or six years, I would say every other month I gave A presentation at some conference talking about the data that we literally had just collected maybe a month before. So we were publishing data on a regular basis much more frequently than a normal engineering company would do, or anybody doing a long-term study.
You know, we were giving people literally month to month update, Hey, this worked, this didn’t work. And I got to be an entertaining speaker, let’s put it that way. And so that I built that reputation over those five or six years. You know, not only as a water person or persona but in the technology world, people knew that I was testing equipment.
They knew I had a research center, and so people would contact me and say, Hey, can you test this piece of equipment from me? And I said, sure. You know, and, and so we had about, Four different locations. We could test wastewater, seawater, brackish water. We had all different things we could test. And so we would bring equipment in.
I was actually able to generate I guess I can say it now since I don’t work for them anymore, but profit for the city. So we would charge people to test their equipment and I would start getting checks in and I’d go to the auditor and say, Hey, I got this check for, you know, a hundred thousand dollars.
And they’re like, it doesn’t go that we pay money, we don’t get money. It’s like, well, what am I supposed to do with it? So we had to come up with a whole different accounting scheme to be able to move the money. To be honest, I don’t even know where it went. But so yeah, we were able to generate a kind of a little cottage industry because of the work we were doing, the fact that we were publishing a lot and the fact that people would continuously.
Reach out to us because they knew I was an honest broker that if something worked, I would say, yes, it worked. If something didn’t work, say, look, this don’t work. I made some friends, I made some enemies. But, that was fine. It kinda all worked out the end.
So that was, really, I mean, I did other things. I did two big watershed plans. One was a cross-border watershed plan between Mexico and the United States and the Tijuana River Valley. So the, you know, that was quite an interesting project. I was able to work on a lot of different things, but the research work really led me to where I am today because that essentially primed me for the job at American Water as innovation director.
And now in the role I have consulting with other startups,
Antoine Walter: I’d like to understand that part as well. But what you’re explaining here makes me think of what I discussed with Paul O’Callaghan on that microphone when we discussed the dynamics of water innovation. And he was explaining that you need to find the right individuals within a utility and that those are often the ones speaking at conferences.
So I guess you are that exact description. I mean, you’re this one person of these utility people, which. Are the ones will help you to develop the tech and to get it to market if it’s not snake oil assuming it’s legend. So I guess his definition was right. You can track your kind of profiles in, in conferences, but I’d like to dive a bit deeper in that in a minute.
But I’d like to understand how you transition from a utility. So public works to the devil, which is the private.
Paul Gagliardo: so I had worked for the city for 25 years. It felt it was time to do something different. So I’m actually gonna add a fourth leg to the stool. So I went to work for a a multinational engineering company. So that was my first stop after the city. being on the other side of the coin from the city project manager trying to, sell, Our services to the same people that I was once one of.
And so that was kind of the next step. And it was interesting. The first project I worked on was a there was perchlorate contamination in the Inland Empire in the groundwater just east of la. And Lockheed Martin was responsible for cleaning it up. And there was about maybe seven or eight cities that they were talking to.
they brought me on through the consulting company because I could translate for Lockheed Martin what it was that the city, utility people were saying and what they would accept. So we’d go into a meeting, we’d sit in a meeting for two hours. We’d walk out to the parking lot.
I could still visualize this. And the Lockheed Martin guy would say to me, did they say? What do they want? I said, look, this is what they want. And they’re like, really? It’s like, yeah, you offer ’em this, you’re, they’ll be happy. And so that was my role. I was a translator. So I was able to use my bureaucratic knowledge and provide insight to the engineering side of the house so that they could kind of craft the, offering that they would provide these utilities to, you know, make them whole, fix their problem.
Antoine Walter: if it needs a translator, does that really mean that those two words speak different language?
Paul Gagliardo: yes. Oh, absolutely. So that was something I was thinking about when I looked at your questions. It’s all about perspective. and I’ll use this example, say you have arsenic and groundwater, a utility, a project manager at the utility, their role is. , I need to build a system that will meet the regulatory requirements under budget in a certain amount of time.
That’s it. On the engineering side, they have to convince the utility to hire them to be able, because they know what they’re doing. But their ultimate goal, they sell hours. They need to put their people to work because they need to get a 75% utilization rate of all their employees. And so they need to sell hours, but they’ve also gotta convince the utility that they know what to do.
They’ve done it before they can do it again. And then you look at the startup side. Say the startup has a new technology that maybe the engineering company doesn’t really know about, maybe the utility doesn’t know about. So the startup then has to convince both the utility and the engineer to take a risk on their technology that it’s going to provide.
better value at minimal or no risk, either reputational risk to the engineer or operational risk to the utility. So everybody’s perspective on the same issue is different. I think that’s really important to understand and that’s how one of the ways I help startups is to help them understand the voice of the customer.
this is what the utilities goal is. If you pitch it this way they won’t care. You know, you have to pitch it in this manner, then it will talk to them, and you at least you have a chance. So it’s all about perspective,
Antoine Walter: Transitioning to those perspective, into this word of startups. You’ve called your podcast a water entrepreneur, which is the same time broad and very specific. I’ve had
Paul Gagliardo: on
Antoine Walter: of them on that microphone, and I had a hard time to define like a typical portrait. Would you have a definition of this water entre?
Paul Gagliardo: So when I started it was all about founders. And their, I call it their origin story. Why did you decide to start a new company? Why did you pick the water business? How did you pick the technology? all those kinds of things. And as it began to go through those stories there, they were still very compelling, but it became clear to me that the word entrepreneur could be different things.
And so I started talking to some regulatory people and you know, because they have. A same, similar kind of role because they have to set the rules of the game for everybody to follow. And so they have to be a aware of new technologies as every anybody else. I would start talking to utility people because as you talked about, I called them innovation champions, the people that would try new things.
And so I viewed them as entrepreneurs. So yes, in the beginning it was quite a narrow definition. It has since broadened out. I’ve talked to people who are focused on mentoring engineers leading into the water business. I’ve talked to executive recruiters about how that works, but you know, so everything tangential.
I’m gonna be talking to a branding company, you know, talk about how you brand a water company, but any kind of company. it’s all about how you get noticed and how you can go from nothing and nobody, to a multi-billion dollar company that every startup wants to be, and every venture capitalist wants to invest in.
Antoine Walter: So that’s a very interesting take because to my knowledge, there is no startup company in the water world, which ever became a unicorn. So nobody ever reached that billion. Do you think
You’ve met the ones which will eventually break that glass ceiling?
Paul Gagliardo: Probably not because you’ve got these big holding companies like Xylem or. You know, Suez or Viola back in the day, US filter. What typically will happen is, there’ll be some private equity money or venture capital money come in. The company will grow to, 20, 30, 40, 50 million revenue.
And then the VC will look to exit. And what’s the best way to exit one is to i p o, but most of the time you’re gonna sell to a holding company. That’s typically what happens. So you see these big conglomerates, and then at some point in time, just like us filter, they’ll begin to divest. You know, they’ll get to a big place and then the, it’ll be too unwieldy and then they’ll start selling off.
Hasn’t quite happened to Z yet, but a few more years, a few more acquisitions. And I think that they will get to that point where they either need to spin something off. Or divest in a certain position, maybe focus more on certain kinds of business. business model gets a little unwieldy, although I, think Xylem does a good job because they do let the individual companies kind of run themselves.
They don’t try to pull ’em into, yeah, they’re more decentralized instead of centralized. So I think that will help them in the long run. But I still think at some point in time you will see this divestiture in some way, shape, or form. So, yeah, I don’t see water companies becoming unicorns.
I, I haven’t seen the one big thing that will be so, disruptive, like, you know, a new reverse osmosis membrane that. only takes, a 10th of the energy that normal RO takes, and all of a sudden you can make drinking water from sea water, very easily and at low cost.
And it solves all the water problems, that’s something that a lot of people are trying to do. But you know, obviously haven’t seen it yet. So, there’s a couple of products that I would love to see come to market, but nobody’s cracked the nut yet.
Antoine Walter: I don’t want to take you to a full sidetrack, but when you see companies like 374 Water or NX Filtration, which have these kind of differentiated takes, which might become. Extremely big, or which might also burst, they’ve been hovering between these 500, 700 million mark, so not unicorn, but the closest we’ve been in a decade, probably in the water industry.
So disruption seems to still be a possibility, even though not very probable.
Paul Gagliardo: It certainly is, and one of the interesting things about the water business up until a few years ago, it was really mired in, the 19th century. It wasn’t, digitized. it was very conservative business. And in the last five or 10 years, things have changed quite a bit What’s interesting about it is that there’s a lot of room to innovate. And I’ll give you one example, and, I’m old enough to have remembered Watergate and the Watergate hearings and the United States were, the whole idea was to follow the money. So if you look at water utilities spend more capital money on fixing and replacing pipe than they spend on anything else.
hundreds of millions, billions of dollars a year. And 90 or 95% of the cost of replacing a pipe is digging up the street. So if you could, so, one, there’s a lot of money there. You know, you talk about unicorns. There’s a total accessible market’s huge. If you could find a way. to fix the pipes from the inside, send a little swimming drone into the pipe.
It swims around, it sees the leak, it stops it, squirts the, super glue into the hole, and it goes on its merry way. All of a sudden, you have a solution that it is avoiding or replacing huge amounts of cost utilities would otherwise have to spend. so there are opportunities. The other thing that comes up are, new like p ffa s now, you know, that’s the new big bogeyman as far as a contaminant goes.
So somebody who can come up with a very cost effective way of treating that particular chemical will make a lot of money. People have done that over the last few years in the lead service line replacement. Programs cause of Flint, Michigan. So now there are new rules about that. So now people have to do stuff.
You have these regulatory mandates, it generates a lot of value. So the next big thing that’s gonna come up from a contaminant perspective is going to be microplastics. So that’s my prediction for the next place that you will see a lot of innovation in, because people are beginning to be worried about that.
They’re seeing microplastics everywhere. Someone will determine that it’s hazardous or, you know, toxic. countries will start forming regulations. People will have to do things about it. People will generate monitoring systems and treatment systems or whatever it happens to be. And that’ll be the next, big area where lots of money will be spent.
but a lot of these things are driven by regulatory mandates.
Antoine Walter: Again I, I should ask Paula Royalty for every time I mention his work on the dynamics of what innovation, but that’s what he defines as this crisis-driven innovation, which goes twice faster than the value-driven one.
Paul Gagliardo: Yep.
Antoine Walter: You mentioned how to follow the money, and you’ve talked about venture as well, I’ve seen many opinions on that.
People complaining that the venture funds aren’t that interested in, in water. You see the number arising, because I think last year was that the record with 650 million invested by venture capital into the Waterfield, now there’s an outlier because maybe 20% of that amount is invested into source.
And source was also the biggest investment from VC in 2020. So if you remove source from the water sector, it already changes a bit, the picture. So one way to, to look at that is to say it’s growing. and what you see also with funds like Burnt Town and Ventures like Mazare coming with that VC card and saying, we can do something in that field.
The other way to look at it is to say the VC pool worldwide is so wide that when you do the maths, it’s zero point 14% of the venture capital money, which flows into water on which side of the health, empty or health food glass are you, how do you look at that?
Paul Gagliardo: gonna take a step back. When you look at the world of VCs, when they form themselves, they make a very clear decision about the niche that they’re in. , we’re gonna be early stage, we’re gonna be late stage, we’re gonna be growth stage. We wanna invest this much money, we wanna invest that much money.
We have this kind of timeframe horizon. So there’s about, I don’t know, six or eight different, criteria. So when I try to match up my VC friends with my startup friends I have to say, okay, where are you, startup in the grand scheme of things and which of the VC funds match up with what you’re interested in?
So right away you may have, the pool may go from a hundred to five that match up with a particular company that you’re looking at. And then maybe popularity contest isn’t the right way to say it, but I feel like the startup founder. Is almost as important as the technology and the market that they’re looking at.
So a VC could look at a, technology and say, yeah, that’s great. We love it, we love the market. We think there’s a lot of value there. Eh, we don’t really care for, the person who’s running the company and it’s over. It’s just over at that point in time. So to get back to your question though, I feel like the VCs have come a long way from expanding their time horizons for exits, which is good.
Expectation of return on investment has been tempered somewhat, so that’s good. There’s still a huge amount of money on the sidelines. And I have seen folks that have terrific products. and their expectation or their valuation is out of range from the VC’s valuation. So I think it’s the matchup between the startup or the water company itself and the VCs to what their expectations are.
So say you have a water company that is focused on machine learning and AI for whatever purpose, you know, are they gonna value themselves as a water company or as an IT company? And of course the startup is gonna think of themselves in a higher valuation perspective, whereas the VC’s not.
And so it’s really a matter of matching up the folks. I think you know, burnt Island is doing a really nice job with investing in. really good quality companies at reasonable valuations. And you look at an organization like Imagine H two O where they run a lot of companies through their accelerator and they really help them understand the entirety of the business because that’s one thing that when I talk to startups, most of them have zero experience in the water business.
And not that the water business is so complicated, but it has its quirks and if you don’t understand the quirks you can’t get outta your own way and they can’t get to where they want to get to. And so, what imagine H two O does is really informs the companies about what they need to know and to take it full circle.
that’s what I look at my podcast as doing in some way, shape, or form, is to have the founders tell their stories, explain what they knew or they didn’t know how they got to, where they got to, what mistakes they made what things they did right. And almost provide a virtual mentoring platform for people who were looking to get in the business.
Kind of expand on what imagine H two O does through their accelerator in a more conversational manner.
Antoine Walter: Talking of your podcasts in your inception episode, so the one where you describe what you aim to do, you are talking about your experience receiving startup pitches, and you also explain how you’ve got, I think I’m saying snake all, but you’re saying purpose, motion.
Paul Gagliardo: Motion machine. Yep.
Antoine Walter: So this type of of pitches, I had that discussion with Reinhard Hübner, on that microphone who explained how he got once a pitch from a company which was leveraging the pump cavitation to do some stuff, which was really beyond the laws of thermodynamics.
So what’s the worst you’ve ever encountered it?
Paul Gagliardo: So I’ll tell you that story and I’ll, I’ll I’ll tell you two stories. So one was very similar to that. This guy came to me and he had a kind of an air compressor based system, and he argued that he could take the air pressure on the exit side and use that to repressurize the air on the input side.
And it’s like, well, that doesn’t work that way. like you said it doesn’t meet the secondary thermodynamics. It’s impossible. It, that’s a perpetual motion machine. . And what was interesting about him, and I use the words that sometimes you have to tell people their baby’s ugly.
You know, their system just , can’t work. And that’s what I told this guy. He called my boss and my boss’s boss, and he is like, you know, why can’t you understand what’s going on? And it was almost, you know, kind of humorous that he just believed in his heart of hearts that he had invented something that could do something impossible.
And I’ll give you another example where this company came to me and said, we have kind of trained certain bacteria to do a certain kind of treatment. And we’ve encapsulated ’em, them in like, You know, think of Mad Max and Thunderdome, you know, so you’ve got this cage and the microbes are in the cage so they can’t get out.
The water flows over ’em and the microbes do this great treatment. I said, great. Well boy, that sounds really interesting. I said, why don’t you give us some of your product but also just give us the cage cuz we wanna see if it’s the cage that’s doing something rather than the bacteria. And we tested ’em, you know, kind of side by side.
And what we found was, the cage without the bacteria did a better job of treatment than the cage with the bacteria
Antoine Walter: So it’s kind of an M bbr, R
Paul Gagliardo: Yeah. So, you know, sometimes it takes a little work to figure out that things don’t make any sense. And other times it’s very obvious. When I was at American Water, because I had so many people, I had probably two or three people a day cold calling me about ideas. , I said, look, I’m gonna give you 15 minutes.
You gimme your pitch. I said, 90% of the people I talk to, I’ll never talk to you again. I just wanna make sure you understand that, it’s not that your idea is necessarily bad or good, it’s just it doesn’t, sing to me, I don’t see, the way forward. Whether it, I don’t think it’ll ever work or there’s no application, whatever it happens to be, you know, that was my way of kind of thinning out the crowd.
We had a stage gate process and. I was kind of the first filter on that stage gate process. And there were some things I missed. I mean, as a judge and imagine H two O I would vote against things that became, winners and great sellers and it was like, oh, okay, I missed that one and I would love things that never went anywhere.
everybody has their perspective, right? And there’s things you think of that make sense, but I’ll get back to that. There are some founders that can sell ICE to Eskimos. They just can just sell anything, whether it makes sense or not. And unfortunately, those people tend to be the most successful.
And you know, whereas somebody may have a great product, and I, you know, there’s one guy I’m working with now, he’s got a terrific product, but he just can’t get out of his own way. He just. Can’t figure it out. And it’s too bad. And hopefully he will become successful at some point in time.
But it’s like I said, you need everything. You need the market, you need the product and the founder and then the team together. You need all those things to make it work,
Antoine Walter: so that’s the Martin Guilde where you have everything. Now we feel realistic. There’s a few of the people which have really everything. If you were skipping one of these dimensions because you could outsource it or figure out someone who can help you with that, which one is the least important?
Paul Gagliardo: So I would say the thing that is replaced the most when a funding partner comes in is literally the founder. and one of the things I talk about in the podcast is that, , as a company grows, the founder’s role has to change. they may be a technology person and they have to become a business person.
They have to become an HR person, they have to become a salesperson, and maybe they’re not so good at that. a lot of times the founders are very technical and once they get their investment, you will see the venture capital say, okay, we’re gonna move you to the side. You’re not the CEO O anymore, you’re the CTO O and we’re gonna put a business person in as the c e O.
And so that’s, I think, the thing that really is almost the easiest to replace. The second thing I would say is sometimes people have products that work, but they’re not focused on the right market. And so by having some help to pivot from one, either customer base, or one solution to another that really helps out making a company successful.
Or sometimes they’re trying to be all things to all people. They’re trying to do too many things and you gotta thin ’em down. It’s like, okay, focus on these two things, get your beach head, get your, foot on the sand and then go from there. So I think those are the two things.
The founders they’re fabulous, interesting people. A lot of times they have to move to the side before they think they have to. And then this other idea of pivoting from the standpoint of what market should I be focusing on, you know, municipal versus industrial, there’s a lot of either ORs that people can look at.
I think that those two things are. The biggest alterations that I see being made early stage, almost pre-revenue certainly pre profit in companies that allow them to kind of get through that valley of death, get through that point where, okay, we’re on some trajectory where we’re becoming profitable, we have a sustainable business model.
And we can start to think about a growth cycle,
Antoine Walter: these are some of the topics I heard you discussing with your guests on your podcast. And I sometimes had the impression listening to your excellent podcast, that it was like a public free consulting that you were giving. And so I’m trying to figure out what happens now behind the scene. Because you also work with, imagine age two, you have your own consultancy where you’re helping startups to get to market and to probably apply the advices you just shared.
So is it very similar to what you share publicly or is there like a secret source happening behind the scenes, which would be fully different?
Paul Gagliardo: No, I think it’s, I’m an open book. I’ll give away just about everything. You know, I know, or my experience, the value for me or for the companies I work for comes in applying those things to their specific situation. And so you could talk generally about, okay, you gotta do this, you gotta do that.
But I’ll give you an example. If somebody comes up with a new technology that does something that, You know, nothing else does or does it in a totally different manner. Customers want a comparison. They wanna say, well, how does this compare to what I do now? And so one of the things you have to do, I think, is to develop kind of benchmark performance metrics.
and that’s not so straightforward, but that you can then compare this new thing to the old thing and say, look, if you look at it from in this way, this metric makes sense over here, and the same metric makes sense to these guys. And now you can start to compare things head to head because otherwise you’re comparing apples to oranges.
And if you have a performance metric that says one thing over here, and the units on the performance metric are totally different on the other side. It’s hard for an innovation champion to take the chance. Whereas if you can compare them head to head, then you can say, look, if we put our system in, we can collect this data and then we can compare it to what you’ve done before and we can show you, yes, it was better, the value proposition was better, the performance was better, or no it wasn’t.
And then after that, you get the utility or the customer to allow you to publish that work. So you get that out in the industry so people can look at it independently and make their own value judgment about, yes, this worked, or no, you know, I don’t view those two metrics as being equivalent, you know, whatever it happens to be.
And then also that’s an evolution. Those performance metrics for my clients have changed over time, depending on the data we’ve collected. Depending on the other data out in the so yeah, , I talk generally about what I do and what I think will help companies out. But and my wife will hate this when she hears it, but I think I’m smarter than everybody else and I think I can see the future. So I look at my crystal ball and I say, okay, this is where we need to go. And my clients the ones that stick with me, you know, kind of follow that trail. And I feel like I’ve been successful helping out a number of companies become successful.
And then it’s also a matter of training them, to think this way. I mean, they have a lot of other things to think about. But when I can. Pull this kind of historic knowledge or background knowledge and deliver it to them and get them to understand the thought process behind it. then they can become, because I feel my role has a sunset date with the companies I work with.
And at some point in time they, they’re not gonna eat me anymore. And that’s fine. It’s great. And cause I like working with the earlier stage folks, getting them somewhere getting them to that growth stage. And just like, I said before about people’s baby being ugly, some babies are, cute.
And then they grow up and then you have to let ’em go. I’m gonna use the kid analogy, right? The parent analogy,
Antoine Walter: You mentioned how you like to work with early stage companies, if I’m right. You’ve been with Imagine H two since the inception of Imagine H two. I had Scott Bryan on that microphone, and he was the first employee. So I guess you’ve been in the same founding rounds of Imagine H2O Do you have a metric of how many companies you’ve been supporting since you’ve been within that e?
Paul Gagliardo: I am an original judge on their accelerators so I see about a hundred, 120 companies a year that come through the Imagine H two O process that I’m part of a judge on. I get involved with some of them from a mentoring perspective. Some of them become my clients.
But my role really has been focused on that. Kind of selection process, becoming them, becoming a member of the accelerator cohort for that particular year. One of the things I find interesting is every year there seems to be a trend of technology solutions. So right after Flint came out, there was a whole lot solutions relative to lead.
when they had there was a lot of algae blooms in the Great Lakes. The next year there was a lot of algae solutions you know, PFA s solutions as we talked about recently. it’s interesting you talked about the, you know, kind of crisis management. The founders are interesting.
Sometimes they see a problem and they look for a solution, or they already have a solution. and they try to apply it to whatever problem is coming up. And so, you know, it’s kind of two different ways of coming at it, but my role really has been evaluating the company’s more from a technology perspective and less from a business perspective.
That’s more my expertise. And then you know, working with them in some way, shape or form. When I was at American Water, we pulled a lot of them through into the American water ecosystem to try to see if there was a application within that enterprise for that particular solutions.
I would run my own innovation conferences where I would have 20 or 30 companies come in and the audience would just be American Water folks. Um, We did that two or three times. . And so that was a good way to, you know, for folks to be introduced to these companies. I’m a volunteer judge from Imagin, H two O, that’s my role is just to be, a smarty pants kind of guy that asks what I think are hard questions to see if we can elicit responses from these startup companies that give us some level of insight into whether or not they will be successful.
Again, whether it’s technology, whether it’s personality we look at all those things and the judging panel on imagination was great cuz it’s so varied. It might even be too big. but it’s so varied that you get so many different again, perspectives on these companies I think that’s why Imagination Source are successful is they’ve got this group of judges that can look at a topic from so many different, places that you can really hone in on, yes, these guys will be successful, or the chances of them being successful or high as opposed to this one.
And being able to rank the companies. when I first started American Water in 2009, I was involved in I think four accelerator entities. Imagine H two O was the only one that’s still standing, so I gotta give them kudos.
Antoine Walter: Interestingly on your path. Within American Water, which you just mentioned, there’s one achievement, which sounds almost impossible to me. So I’d really like to get your secret to that because you created a culture of innovation, and I’ve always been told that if there’s one thing which is incredibly difficult to do, it’s to create a culture or to change a culture.
So how do you do that?
Paul Gagliardo: That was probably, that was more difficult than finding good new technologies to introduce into the company. So in American Water you have the corporate entity, and then each of the states is in essence a franchise. And so they have their own organizational structure. So you may have 13 or 14 states.
You have some non-regulated businesses, and then you have corporate. So you almost have say 15, 16 companies in their organizational structures that you have to deal with. And the silos were very vertical. Nobody kind of went horizontal at all. so that was the. activity that I worked on was trying to build horizontal connections between and among these companies so that, if I could find the right person at New Jersey American, and the right person at California, American, and the right person in corporate we could get those people together in some way, shape or form to have kind of a common discussion about common issues.
And a lot of times those folks weren’t talking to each other anyway. so one, we bring ’em together, we kind of talk about things in general, what are you looking for? What’s your pain point? Hey, you know, I’m here to help you. I will go look for things. Resolve your issues save you money, what, whatever the issue happened to be.
So by building those horizontal bridges across those vertical silos, that was the first step. And then it was very important that my first big initiative had to be successful. So it took about a year or so before I kind of hit on something that would be an enterprise-wide success story would save corporate a lot of money.
And was something that just kind of made sense intuitively. And so I was able to, and I could talk quickly about it, but American Water bought. Because of the regulations, 50 million a year of water meters. And we had one vendor, literally one vendor. And so I overheard the supply chain folks talking about that and I said, how do we know we’re getting the best price?
And they shortly their shoulders. And I said, well, why don’t we buy somebody else’s meters? It’s like, well, because we have this back hauling system that only this meter can only talk to this software. And I was like, okay. So what I figured out was if I could come up with a middleware piece of software that would allow every meter to talk to any software that would solve the problem, and then I could buy anybody’s meter we could competitively bid meters out.
and luckily they were in the process of a new procurement cycle on meters, which was like a year and a half away. So I was able to weave myself into that and work with the meter teams in all the states. Work with the meter manufacturers and I found the software provider startup that I got partners up with one of the meter manufacturers and they were able to put in a bid and I was able to define the procurement documents to allow for a non-traditional submittal, cuz that was really important cuz if you didn’t allow for that, then something that was different could not be accepted.
So there’s a lot of legwork to do on a lot of different levels. Long story short that particular group won the bid. We were able to lower our meter cost. by 17% over a five year period, we saved about, 40, 50 million and, just made sure that we were getting the right price for the meters.
so that impacted every state impacted corporate and showed that was it. And because that was such a, then all of a sudden it’s like, hey, people would come to me from internally in the company and say, Hey, I need one of these. And it’s like, okay, I’ll look for one of those. so then they started coming to me as opposed to me coming to them.
And once you get people, you know, coming to you for things, you’ve won the battle, they trust you, now you become that honest broker. So it was important to, to build those horizontal connections in the organization. and then also that first project had to be a winner. And luckily for me it was.
it took a few years. was not an easy process. But I think that it’s a lesson that can be, duplicated in other organizations for sure.
Antoine Walter: It’s an interesting blueprint for the ones which want to replicate. You’ve shared so far a lot of value. There is actually a good way to get more value from you, which is to subscribe to your podcast and I told you off record and I can tell it’s on record. Again. You are absolutely my favorite water podcast and no disregard to all the other ones because I’m really an avid listener to all of them, but I really enjoyed how. Your take is a bit different in how you are part of every single conversation and how there’s three that exchange you have with your various guests. Which leads me to that closing question for this deep dive, which is why did you start a podcast in the first place?
Paul Gagliardo: I guess I get bored easy. So, you know, coming through the pandemic both of my daughters were home and I had to build a studio for them because one was in veterinary school and so she was taking class from home and the other one was teaching from home. And so they all needed space, so we built a little studio on the backyard.
and then they, both moved back out. And so I had the studio and I thought, I really had this interest in, I, I love the stories that all the startup folks would tell me. They were just so fascinating. And when I looked around at other podcasts, nobody was telling stories from that perspective.
And I thought to myself, well, I got time. I’m kind of semi-retired. I still have, you know, plenty of consulting opportunities and those kinds of things. But I work from home. I have the studio, how hard can it be to do a podcast? It was a lot harder than I thought.
But I was able to get a couple of sponsors and, just go from there. so really it was this evolution that I guess I’ve found myself in ever since I started working. , whereas about every five years, I feel like I need to reinvent myself. And I’ll go from like at the city I was working in public works, then I worked in ran the landfills, then I went to the wastewater business and the water business.
And then I went to consulting company. Then I worked for a startup and you know, I went through a private utility consultant and it just, I feel like I needed to learn something new. And I have, you know, late twenties age daughters. So all I was hearing about was podcasts and TikTok and this and that.
And I was like, I need a piece of this, you know, I need to kind of up my game a little bit. And so interesting. I’m gonna shout out to my daughters. One of them is my producer which is great. And the other one, the veterinarian. She’s also know, quite good at music. And so she composed the theme music.
And so it’s, just being able to work, with my kids learn new things. I mean, video editing, audio editing, it’s tricky. It’s, you know, you gotta learn a whole new skillset. so yeah, it’s just something new and different, where I’ll be in five years, to be honest, I have absolutely no idea because probably what I’ll be interested in five years doesn’t exist today.
something will just, kind of tweak my fancy and I was like, you know, I’m gonna go in that direction. But yeah, always, I just like to always keep learning. I think that was a big part of it. And because I had this background and experience with all these companies, , and I’ve been in the water business for so long, I could tell their story or help them tell their story from a technical perspective and from a, just a personal perspective.
And and that’s very gratifying to me. I love talking to the folks. They’re all lovely people. And I just get a kick at chatting with ‘
Antoine Walter: I dunno if you’ve ever discussed with John Robinson from Mere Ventures, and I hope I’m not cracking too much of a secret by sharing this because we recorded that, but then. He postponed his project. So we said, you know what, it was a cool discussion, but the recording will keep it for both of us.
But I guess I’m not giving too much of details here, but he said clearly a bit what you were saying about this. Nobody is in the kitchen with the entrepreneur and telling their stories. And that’s really, I think that was his speech. I want to be in the kitchen with them and discussing their matters.
And I know he’s been postponing his project, but he still has the project. So maybe at some point there’s an interesting link to do here, you from the support and consulting to those people. He, from the VC perspective, but it sounded like. There was a void. You identified the void. You were faster to move than him but it’s a really interesting perspective and I can tell you that from a listener perspective, that I really enjoy each episode you’ve been putting out so far.
I think you’re by 26 or 27
Paul Gagliardo: I think 26 was this week. I’ve got I’ve got three or four in the can matter of fact, in an hour I’m doing another interview. So, same kind of schedule you’re on do the taping, do the editing, and, get it in the queue. So we have a symbiotic relationship that way.
We both, I think, understand how this business goes. And and I really appreciate the opportunity to chat with you. It’s tell my side of the story. It’s great. It’s kind of fun.
Antoine Walter: Well, actually I have a tradition on that microphone , to close each conversation, which is the rapid for
Paul Gagliardo: Okay.
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Rapid fire questions:
Antoine Walter: So in that last section, I’m aiming for short questions, which lead to short answers, but you’ll notice that I’m the one which is always digressing and going , on a tangents.
I hope I can behave. My first question is, what is the most exciting project you’ve been working on and.
Paul Gagliardo: So I think I mentioned it, that Sewage to Drinking water project, that, that made me famous and I will always kind of come back to that. It’s a few years ago, but still that’s the one that I have the most fond memories of.
Antoine Walter: Can you name one thing that you’ve learned the hard way?
Paul Gagliardo: Yes, I think that when you try to move the needle or tell people to or talk to people about something new there’s something I would call kind of expert bias. . Whereas the more expertise someone has , in an area, the less likely they are to look at something new because they think they know everything.
And so what I think was the hard thing for me to learn or to get over was, how do you, whether it’s breaking through to somebody who’s an expert in something and try to teach ’em something new, whether it’s talking to a customer, potential customer, that doesn’t seem to have any interest in what you’re talking about at all.
So I guess dealing with failure maybe is the best way to put it. And I would always joke that when things would happen, I’d fail. It’s like my head would get cut off, like in men in black and they’d stick me in the corner and my head would grow back and then I’d work on something else. And the bottom line is my head always grew back.
I always had something new. , but learning from those failures, really incorporating those lessons from the failures to me has made me more successful in the long run.
Antoine Walter: mentioned your five year cycles, so that one might be a stretch for you. Is there something you’re doing today in your job that you won’t be doing in 10 years that’s twice your horizon
Paul Gagliardo: You know, I may actually be retired by then. Although my dad never retired, he always kept working. What won’t I be doing? There, there’s probably a lot. I just don’t know what that is. Like I mentioned before I’m never sure where I’m gonna be or what the next big thing is for me. , you know, I could see going back and working for a company again, you know, as a chief technology officer or something like that.
I could see myself doing that. I could also see myself, you know, sitting on a a Caribbean island and, you know, drinking my ties and doing nothing. So, yeah, I’m not sure what I won’t be doing. But probably all I can say is I probably won’t be doing this. I’ll be doing something else.
Antoine Walter: That’s a good one actually. It makes me think of, I, I was blessed to have Andrew Benedek on that microphone one year ago, roughly, and I think he got retired for six months and then he got, he got bored. And so usually when you have that drive and that entrepreneurial spirits, um, the, my eyes are fine, but they can get boring pretty fast.
But you, you, you’ll discover what’s the trend to watch out for in the water?
Paul Gagliardo: So I think we talked a little bit about this, but from this perspective of new contaminants like p ffa, s and microplastics, I think you’ll see more of those kinds of things cropping up. I also think that at some point in time, and there’s a number of companies who are beginning to develop what I would call pipe drones you know, swimming drones that you can literally put inside a water pipe or a sewer pipe and be able to do inspections and hopefully do some remediation while they’re in there.
I see that as as a very big thing. I also like the area of of remote sensing, whether that’s by satellite or drone or airplane. You see a lot of that work being done, whether it’s in agriculture, whether it’s in water whether it’s in dam stability. I mean, there, there’s so many applications of this remote sensing concept that and because it’s non-destructive, because it’s, you know, you don’t need a lot of manpower, covers a big area.
You can collect a lot of information in a fairly short period of time. And then it’s a matter of analyzing that data and making it into some kind of actionable knowledge. So I think the remote sensing game is going to be very big. A particular, I mentioned reverse osmosis, some membranes, and I firmly believe that the big breakthrough will come in when somebody can develop an aquaporin based membrane which is kind of biomimicry.
But but that is the mechanism that allows water to move through a cell wall. And so it’s very low osmotic pressure, so it’s not even osmotic pressure it’s just very low pressure. And so there’s, I know a couple of my friends are working in that area. And you know, hopefully somebody will crack that particular nut.
I love things like self-healing concrete. I’m sorry, I can go on and on about Newton. No. So, an aqua Poon is a is a protein that allows water to move through the cell wall. So it’s a matter of how can you line these things up and build a, an actual commercial grade membrane from those organic materials.
They’re, they haven’t got yet. They are working in that area. So there’s other, you know, they’ve used the name of the material and for the name of their company, so it’s like a Xerox machine, right? But nobody’s cracked the nut yet. Nobody’s, the big issue is lining ’em up like little soldiers so you can get a high flu rate, and that’s what nobody’s been able to do yet.
So once somebody figures that out, that will really change the the water business, the water treatment business, and the, and I guess another thing is that whole idea of biomimicry you know, is I think it’s a fascinating thing. If you could take some, something in nature and a, and kind of manufacture, you know, all these people are these you know, biomedical robots and things, you know, I think that’s a fascinating area that has a lot of potential
Antoine Walter: you’re opening me so many avenues for sidetracking. I have really to control myself and you have to be back on that microphone at some point because I want to explore those.
Last question would have someone to recommend me that I should definitely invite as soon as possible on that micro.
Paul Gagliardo: Let’s see who would be a good person to talk to? You know, there’s some interesting people that have been involved in the business. I don’t know if they’re available anymore, but for example, a guy by the name of Rhodes Trussel, I don’t know if you have heard of him. But he was a consultant that worked for me back in the nineties and has, was one of the big pioneers in technology development.
And his, now his son is in the business as well, Shane Trussel. But if you can get somebody from Trussel Tech on the show, I think they would have some very interesting things to say about technology. And cuz they work much more in the technology field, designing systems and they, you know, much more technology focused kind of discussion.
I, I think those guys would be good to talk to. But yeah, if I had, you know, one person to think about that that would be it.
Antoine Walter: Well, thanks a lot for the recommendation, Paul. It’s been a pleasure to, to spend a bit of more than an hour with you to today. I, I don’t want to prevent you from preparing your upcoming interview, so I won’t take you longer. If you want to connect with you, I guess they can look at your podcast, the War Entrepreneur, where is the best way to contact?
Paul Gagliardo: So, we’ve got a website the water entrepreneur.org. We have an email that anybody can contact me the water entrepreneur gmail.com. And our podcasts are on Spotify and Apple. Those are the best place to find it. Same name, the Water Entrepreneur, one word, no caps. And yeah, I, you know, feel free, anybody, feel free to reach out to me.
I love talking to folks. That’s that’s my favorite thing to do.
Antoine Walter: as always, the links to all of that are in the show notes. So check it out. I stand my point. Um, I really, I’m even, to be honest, I was wondering if your podcast had existed before mine. Would I have started a podcast? Not sure. So I’ll tell you, you’re really my favorite. So thanks a lot, Paul. It was a pleasure to, to speak with you and as I said, there’s so much matter for a sequel whenever you want.
That microphone is open.
Paul Gagliardo: thank you so much.
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