with 🎙️ Reinhard Hübner, CEO of SKion Water, 2021’s Water Company of the Year
💧 SKion Water is an international water technology platform, that aims to empower water technology companies to make a difference.
What we covered:
📈 How SKion Water was built from scratch in a decade, to reach about 750 M€ yearly turnover
🛣️ How building a successful water company all starts with choosing your path (and what the options are)
🤑 How cheap money comes with drawbacks and how this can be problematic for water entrepreneurs
🤪 How water market capitalizations totally go through the roof these days (and what to think about it)
☠️ How there’s no magical way to skip steps and how it is dangerous to even try
💧 How the water industry is segmented, and how important it is to target the right section of the food chain
🤯 How it might be tempting to see yourself as much more clever than everyone before, and how that can lead to terrible mistakes as a water entrepreneur
🌳 How trees don’t grow up to the sky, and how being reasonable on your business expectations is the best way to really deliver
🤝 How it might be tempting to see tremendous synergies between various branches of the water industry… and how those rarely (if ever) exist
🍏 How what matters at the end of the day is less the plan than the way you execute it (and how you might have to go in the trenches)
🧱 All in all, how Reinhard built the 2021 “Water Company of the Year”
💧 How Reinhart almost fell into investing by accident
🍏 The two reasons why one would want to invest in Water (despite all the challenges)
🍎 How SKion’s success was born in early, rapid, and spectacular failures
🍏 How the focus is not to acquire companies but to serve the real customer needs (and the foolproof trick to always keep that market pulse)
👝 How the Water Sector’s structure is quite unique in terms of company sizes and how a certain one doesn’t exist at all
💰 What’s the best way to invest in water companies and why
🧍 Who are the best water entrepreneur profiles, why, and how they have to take risks
💸 Water Industry’s consolidation frenzy, too much money potentially killing companies, crazy valuations, learning from history, giving atypical companies a chance… and much more!
🔥 … and of course, we concluded with the 𝙧𝙖𝙥𝙞𝙙 𝙛𝙞𝙧𝙚 𝙦𝙪𝙚𝙨𝙩𝙞𝙤𝙣𝙨 🔥
Teaser: The 7 secrets of the Water Company of the Year
🔗 Have a look at SKion Water’s website
🔗 Come say hi to Reinhard on Linkedin
is on Linkedin ➡️
Infographic: The 7 secrets of the Water Company of the YearLinkedin-Infographic-Reinhard-Hübner-SKion-Water
Quotes: The 7 secrets of the Water Company of the YearQuotes-Reinhard-Huebner-SKion-Water-7-Secrets-of-the-Water-Company-of-the-Year
Table of contents
- What we covered:
- Teaser: The 7 secrets of the Water Company of the Year
- Infographic: The 7 secrets of the Water Company of the Year
- Quotes: The 7 secrets of the Water Company of the Year
- Full Transcript:
- A postcard from… Frankfurt
- Introducing Reinhard Hübner
- Building a Water Empire against the odds
- Cracking the code of Water Entrepreneurship
- A consolidation frenzy in the Water Industry
- Can one approach the Water Industry from a Finance angle only?
- What shall you look for when investing in a Water Company?
- SKion Water’s distributed investment strategy
- What is the bigger picture?
- Synergies between water verticals barely exist
- Is industrial water any different? (Spoiler: no)
- Becoming an agnostic solution provider with an unique positioning in the Water Industry
- SKion Water has built a category of its own
- … with a built-in flexibility when the opportunity is too good to be ignored
- Which type of investor is SKion Water?
- Where does SKion’s core start and stop?
- SKion Water has three ways to partner with a Water Company
- Walking the Talk: Executing on an Investment Strategy
- What are water entrepreneurship best practices?
- Pitching to Reinhard: a Worst Of
- How to capture water innovation from academia (and turn it into successful water companies)
- Rapid fire questions:
- Other Episodes:
These are computer-generated, so expect some typos 🙂
Get Season 2's Summary!
Antoine Walter: Hi, welcome to the show.
Reinhard Hübner: Thanks for inviting me.
Antoine Walter: There’s a ton of things I’d like to discuss with you today. It’s not every day that to have someone which is featured on the water technology power list, which is also featured on the most transformative leaders in the water industry list. So you can guess that I have many things which I’d like to discuss with you, but that all starts with my good old tradition of the postcard.
And you’re sending today your postcard from Frankfurt. So what can you tell me about Frankfurt? Something that I would ignore by now.
A postcard from… Frankfurt
Reinhard Hübner: Frankfurt is much better than his reputation. I’m originally from Hamburg, which is one of the most beautiful cities in Germany, but I’ve been here now for almost 12 years and it’s become home with a river.
That’s always good. When you work in the water sector, especially in summer, the banks of the river are actually very beautiful, full of people, enjoying the nice weather, having drinks and barbecuing and what have you. And that’s probably also the postcard. Life around rivers. This is how most cities evolve historically, because water is life.
So this is a good fit with what I’m passionate about. Work-wise
Introducing Reinhard Hübner
Antoine Walter: which makes for a smooth transition for my, my first question, because you mentioned you’re passionate about water. I just wanted to know how to define you, because you could be an investor that happens to cross the feel of water and then stays there.
Or you could be entering that field because you said. I want to do something with water. So let me be a water investor. How would you define yourself?
Reinhard Hübner: First of all, I’m not an investor. My background is operations. I did manufacturing logistics, and my PhD is on mathematical optimization of specialty chemicals, production networks. So:
Water is an accident in my life.Reinhard Hübner, CEO of SKion Water
I got asked to do a project for a utility in the UK. I said, Hmm, infrastructure UK don’t know. And then they said is London. And I said, okay, cool. I have a good friend in London who I hadn’t seen in four years. You pay me three months in London. I go and I ended up with Thames water.
Becoming a Water Investor by accident
And then total, I worked almost two years for Thames water in operation. So I got into water on the operation side.
I had no idea about investing and I had no intention to ever get any idea about investing.Reinhard Hübner, CEO of SKion Water
My plan was to become head of operations somewhere. And then I got hired away into SKion Water because Susanne Klatten.
Had decided she wants to do something entrepreneurial in water. And, uh, there was no clear. Plan of what this could be like, but the good thing was she didn’t want an investment banker or M&A advisor to do this. She wanted somebody with an industrial background in water. That’s why I was hired. So I learned everything about investing on the job, except for the fact that I’m from a family of lawyers.
So I have a little bit of a predisposition to the legal stuff.
I am not an investor. I was never meant to be an investor.Reinhard Hübner, CEO of SKion Water
Water happened to me. And the reason I became an investor is the opportunity to build something entrepreneurial in water. I wouldn’t have done it in another area.
Building a Water Empire against the odds
Antoine Walter: But why build something entrepreneurial in water, which is maybe not the easiest field to do something like that?
Reinhard Hübner: Well, you know what, back then when we started, I had no idea why. I asked Susanne Klatten. Why? Because
I could not understand how you can want to do that.Reinhard Hübner, CEO of SKion Water
And she had a very convincing reason. It was two different dimensions. One was, it is actually a sector that addresses one of the biggest problems societies across the world face.
And the problems will only get bigger. So it must be also a decent business opportunity given the fragmentation of the sector and the fact that it’s a bit backwards, but even more important. It was also about her wanting to make a difference, giving things a chance, trying to do things a bit differently to contribute to the problems that society is faced with water.
So a bit off, um, what will my grandchildren say? Did I make more money out of money or did I do something meaningful? And what it would entail? We had. At the time we had a blank sheet of paper and we had a few ideas off of what we could try. Uh, the first attempt that we tried was immediately a failure, but that’s good because you learn from failures.
Water Startups are difficult to take off
And if you do them early in the journey, then you can correct your course fast. We did a startup type investment into a chemical free cooling tower, uh, treatment technology. And
The conclusion actually was that startups are really difficult in water because of the fragmentation of the industry, but also by the risk aversion of customers.Reinhard Hübner, CEO of SKion Water
The fragmentation leads to an incredibly high sales efforts. So your costs to make a sale are quite high in terms of how many times do you have to visit how many customers, blah, blah, blah, but also customers for good reasons are reluctant to take risks for a two, 3% cost saving to take a risk and end up in the newspaper because you polluted something or you shut something down or what have you.
Your technology must be 20-30% than the market standard to stand a chance
It’s just not very appealing. So the benefit you provide. With the new technology must be like 20, 30% better than what’s out there today to really excite somebody or you solve a problem for which there’s no solution. That’s always fair game, of course. And to try this with a single product company will only work.
If your product is truly distinctive and many things that people call innovation, I actually just an invention and incremental improvement. They just don’t make such a big difference. And this is also the trap we run into the technology works, and it was also environmentally beneficial in terms of using less or no chemicals, but it just didn’t make enough of a difference for customers to get excited enough about it.
So we integrated it into later on parts of it into Envirochemie when we acquired Envirochemie, and the rest we shut down.
Cracking the code of Water Entrepreneurship
Antoine Walter: There’s a lot to unpack in what you just said. I’m taking the fragmented aspect and putting it in the fridge and we’ll come back to that. This is a podcast it’s not the first time you appear on a podcast.
So I did my due diligence of listening to you on your previous appearance, I’ve heard your, your theory of them 20 to 30% improvement in order to make a dent. You mentioned that to me, when you were discussing with Will Sarni and Tom Freyberg in their excellent podcast. And I’ve heard you discussing this element of the value-driven innovation versus the crisis-driven innovation with Paul O’Callaghan, which was a funny one because you hosted him on his own podcast.
So that was also a good experiment.
Reinhard Hübner: He could hardly host himself on his own PhD. Right?
Antoine Walter: I was discussing all of that with Paul on that microphone. So I’d like to dig a bit further into those directions for today and this element of. A single product company cannot succeed in the water industry. And a startup is difficult to take off in the water industry.
Somehow gives us some understanding key for what you’re trying to build today with SKion water. So what is SKion Water?
The story of SKion Water
Reinhard Hübner: Okay. SKion water started as SKion investing into a few water technology companies. And when we got more successful at investing into water technology companies, we had to figure out, will, this just be a group of companies.
We happen to be shareholder off, or will this be more. And since we control the companies we acquired, there was also always an alignment topics and so on. At some point we decided together with the management teams of our operational companies, that there’s a bit of an umbrella needed that also can be used towards the outside world.
And then we grouped that into SKion water. So SKion water today is a water and wastewater treatment solution provider serving both municipal in some countries. and industrial customers across pretty much all over the world. This is how I would define us. We still happen to have a strategy where we anorganically grow.
So we still buy more companiesReinhard Hübner – CEO of SKion Water
but the focus is on serving our customers with water and waste water treatment solutions. And that we also do across the company. So we can serve customers across the world, leveraging the resources of several companies. We share our technologies. We develop markets and customers together.
So there’s a lot of collaboration behind the scenes, but to the outside world, also, the company stay very independent.
We don’t want to become another large corporate. We want to stay a little bit more decentralized and closer to the market, to the end customers.Reinhard Hübner – CEO of SKion Water
Building something that doesn’t resemble the current water giants
Antoine Walter: You don’t want to become a large corporate. Can you put a name on what you don’t want to become?
Reinhard Hübner: There’s various ways to look at it, right? I mean, obviously everybody looks at what now is Veolia plus SUEZ in one, but that is very, very large and quite centralized in some areas. And it’s still quite decentralized in other areas except for the name. But like, if you, if you look at other people with an M&A strategy to grow Pentair acquires companies and then makes them all Pentair.
So they’re completely Pentair, no judgment. And Danaher, uh, has a more de-central strategy as well. Uh, they have Trojan and they have . They have what have you, they keep more of the identity of the companies, but they’re in the equipment business, not in the solution business. Pentair has also more or less an equipment business.
A decentralized approach to global water
For us, it’s the focus on end customer relationships, providing solutions to end customers and not selling components because the kind of difference we want to make in terms of bringing new things to customers every once in a while, a is easier to do when you have the end customer relationship. And when you don’t have to go through an EPC or integrator, but you are the integrator.
So that’s the, I think the two things where we differ, we, we are an integrator. Provide complete treatment solutions. And we do this de-central model. That actually is somewhat similar to Danaher, but it’s of course easier to do on the component side. Because on the component side, you have no overlaps in the solutions business.
You sometimes have overlaps within the companies.
A consolidation frenzy in the Water Industry
Antoine Walter: Again, there’s a lot to unpack here, but I have to keep a bit of the topics for the rest of our discussion. So I won’t jump into everything right now. Let me start this deep dive into your strategy and your approach to the market with somehow the reason why I’m discussing with you today towards the end of my interviews, you know, I’m asking my guests to recommend me, someone, and I was interviewing Sebastian Andreassen from Cembrane.
He recommended me to reach out to you, which was great because. To be transparent you were on my bucket list for a while, but the reason why he recommended you is because Cembrane just got acquired by Ovivo. So by SKion water. And right now, I mean, if you’re looking a bit left and right in water industry, there’s a lot of these moves happening.
You could call it a frenzy, but at least there’s something happening around this consolidation. On what you mentioned is a scattered industry. You’re playing your part into that. And I was just wondering. Did you identify a driving force, a reason why all of that is happening right now. Do you see it lasting over time?
And do you intend to keep playing a role into that in the next years?
Reinhard Hübner: I’ll, first answer your question. Um, and then I’ll say something about Cembrane.
The Industry is indeed consolidating and it has had consolidation runs before.Reinhard Hübner – CEO of SKion Water
The best known example of that was us filter. then Siemens water. And now Evoqua. For a while, they bought pretty much everything they could buy.
Consolidation is a tricky game
Then it went wrong for a while. And then. with Evoqua now. It works very well. Actually, this was a classic roll-up of different equipment companies without an actually in the beginning, capturing the synergies properly and without having a plan of what to do. And now there is a plan with Evoqua that works, but it took a few owners to get to that point.
The result has been that there’s no mid-sized companies anymore. There’s lots of small ones, but the mid size with a few hundred million in turnover are gone.Reinhard Hübner – CEO of SKion Water
And then there’s the big ones. The market structure still is quite similar. So when we looked at north America a few years ago, There was hardly any company in the range of say 75 to 200 million turnover.
SKion Water’s M&A Strategy
There was the small ones. And then there was a few very big ones. And we were actually lucky with Ovivo that they were in the range of 200- 300 million that we could take them from the stock market. This is still the case. So
You really have to do a small buy and build.Reinhard Hübner – CEO of SKion Water
We buy companies with 1, 2, 3, 4, 5, 6, 7, 8, 9, 10 million in turnover.
Not always, but we do that. But we don’t do it because we want to get big. We do it when it’s a fit. And in many cases in Europe, it’s companies without successor and these small companies actually struggle to manage succession. There is people who want to roll up just to get bigger. Then to sell it to the next owner.
ESG Money is flowing into the Water Industry – and it has consequences
And this is the drive that’s caused by say private equity, like money and all those ESG strategies these days, why financial investors, and this is a bit dangerous in my view because I’m a bit harsh and all, maybe when I say:
Too much stupid money is chasing too few good targets!Reinhard Hübner – CEO of SKion Water
But there’s really people who have no idea about the water sector.
Just do it to tick a box. And they will just have a high risk of destroying the companies, but overpaying too much and then squeezing them until there’s nothing left to squeeze. So the overlaying driver right now is all this ESG investment frenzy on top of the consolidation. If you look at buyers, many times, it’s private equity and the likes who buy strategics, also buy and some buy also at high valuations and some have very clear and thought out strategies, but other stuff has also just gobbled up.
Can one approach the Water Industry from a Finance angle only?
Antoine Walter: So, just for me to understand that. That means that you see, it really a as a financial thing.
Reinhard Hübner: Well, there are some strategics that have a strategy and execute that strategy, whether you’d like the strategy or not. I mean, again, Evoqua has had a strategy of why they buy certain things. Xylem has had the strategy of why they buy certain things where you can say, yep, there’s a logic behind what they do and whether it works or not, the future will tell, but there’s a logic.
Some of these financial place, I just don’t see the logic other than the greater fool theory buying and selling out to the next buyer in four or five years. And
The water sector just doesn’t lend itself to flipping companies in four-five years.Reinhard Hübner – CEO of SKion Water
Are we experiencing a water financial bubble?
And then if you look at also the stock market, some companies list at valuations that are just insane, but there’s sufficient interest from financial investors to buy at such valuations.
There are companies that have hardly any turnover. And they are listed for 200, 300, 400 million market cap. I mean, that’s insane!Reinhard Hübner – CEO of SKion Water
Antoine Walter: That’s really something I’d like to understand because I could give you some outliers and tell you, there is for instance, Innovyze, which gets bought at 400 million and gets sold at 1 billion a couple of years later, or I can give you the example, which was popping up recently of Saur, which might be up for sale again.
And which, if it’s sold at the price, which is advertised, would be like a nice investment from EQT because they would be doubling or tripling their invested money. I would agree with you. That’s that was a, probably more the outliers than, than, than the truth. The second element of this valuation of companies I’ve been discussing on that microphone with Kobe Nagar, for instance, from 374 water, they have an awesome product awesome company, and sounds really to be extremely promising, but they are discussing two 10 references and they are valued at 600 millions.
It sounds like there is something happening in this financial valuation of companies, which goes beyond my little, understanding as a finance muggle. Do you have a better view there?
Current water company valuations are hard to explain
I have no explanation for these valuations. If you do the math on how much they have to sell to ever reach that value, you will find the math is impossible.Reinhard Hübner – CEO of SKion Water
Reinhard Hübner: And this is happening every month at the moment that I see companies that get sold at valuations that are something I don’t know how to justify. And I mean, I’m a very simple guy in terms of doing the math. I’m not trying to make the fanciest model, but if you look at how many years will it take to earn back that money, or how many years would it take to get to something.
A reasonable profit, miserable to get to that. I don’t see it. I just can’t explain this. It’s great for the companies to raise money on that valuation, but I just can’t explain it. If you look at the most successful startups in water ever like Zenon and so on how long it took them to get to 50 million turnover, to a hundred million turnover.
And you see these business plans that go to like half a billion and turn over in a few years. Never. It’s not going to happen!
Is the Water Crisis becoming reality, hence a driver?
Antoine Walter: Which brings us a bit back to the work of Paul O’Callaghan, which is showing that it takes so much time to be in the middle of the market, which you could oppose by saying in his own model is saying that crisis driven could be really changing the game.
And if you consider what we are living right now with water as a crisis, I mean the 40% water that might be missing in 2030, the two third of humanity, which might be facing water scarcity by 2025. If you consider all of that as a crisis, and you say, finally, the World is opening its eye on the crisis.
Then maybe that explains all of the shifts.
Reinhard Hübner: Well, then you still have to ask two questions.
What contribution will that company make to solve these problems and how much better is that contribution?Reinhard Hübner – CEO of SKion Water
If it makes any contribution at all, then the other solutions that are out there by other thoughtful companies that just don’t happen to look for an investor and go on the stock market, but have maybe better offerings?
The “false nose” of the SDG-6 crisis-washing
Antoine Walter: Well, I could finally fully sidetrack you here and tell you that. I mean, you’re not an investor as we explained it, but it’s still that you’re acting in the market as an investor. So I guess you must be pitched quite a lot by companies, and I could bet you that every second pitch you receive says that the company is saving the world with regards to SDG six and water scarcity, right?
Reinhard Hübner: Yeah, every company is now ESG. It’s not just impact anymore, it’s ESG and they solve all the problems of the world. And some of them have a decent technology. Some of them have an also run technology. Some of them have a business model where you wonder, even when you’re central, the oil and gas industry your ESG right.
I mean, fine. If you do something for the environment you are ESG yes. I don’t know, maybe I’m,
I always am afraid I might get too cynical, but this is a bubble that will burst at some pointReinhard Hübner – CEO of SKion Water
All of these technologies have to work and make money. And if you look at companies that went the hard way to actually build a business and make it profitable, instead of just raising lots of money off some stock market story, it’s hard work!
Cembrane is a good example. I meant they managed to become profitable and do lots of meaningful treatments and drinking water. And then wastewater just properly building a business. We started as a customer, not as an investor, we were an early customer of them.
What shall you look for when investing in a Water Company?
Antoine Walter: So does that give us a hint at what you’re looking at when you’re investing in a company?
I mean, SKion water has invested in 14 companies over the past four years. So I guess. You must have be finding some things in those companies. And what I understand here is that this element of being profitable or at least close to cash neutral is something you look at.
Reinhard Hübner: And now we also do stuff every once in a while, when we believe in the technology where it’s still loss-making,
We need to be convinced of the contribution that technology or company has to the market or to our strategy. Like for a technology, we need to really be convinced this is 20, 30% better.Reinhard Hübner – CEO of SKion Water
And Cembrane is, we tested it out because we were a customer. We bought it, we used it. We got a license agreement for the electronics segment, with exclusivity and we got along very well with the owners and when they needed funding to grow capacity in the end, the conclusion was we buy the thing and we fund the capacity expansion, but that’s a good problem.
Then, we found the capacity expansion because there’s more demand than they can supply at the moment. We’re not inflating a company. And elsewhere again, we are quite rigorous on all our technical assessment to assess whether something makes a difference or it’s a geographic place. Sometimes we buy ourselves into a geography.
Sometimes we just take companies where there’s no successor and there’s just great companies and they would just have a problem with nobody takes over when the current owners retire and that’s actually a perfect situation for us.
SKion Water’s distributed investment strategy
Antoine Walter: So let’s take the example of Cembrane. Cembrane is not bought by SKion Water it’s acquired by Ovivo.
So you’re a Ovivo. Ovivo is one of these five branches you have today, but it’s arguably the largest one. You mentioned when you bought it, it was around 300 million, something like that. And if the latest numbers, I found are right, you’re between four and 500 right now.
Reinhard Hübner: Yep. Our turnover is 750 in the group and Ovivo is 400 off that plus minus of that.
What is the bigger picture?
Antoine Walter: What is the bigger picture you’re you’re aiming at is it really developing SKion water, or to say SKion water features a SKion water EPC company, and that SKion water EPC company happens to be Ovivo. Let’s give Ovivo the right tools to develop into this EPC.
Reinhard Hübner: Actually the companies all have pretty clear profiles Ovivo does municipal north America and energy and electronics worldwide
EnviroChemie does industrial in Europe, both fresh water and wastewater. Eliquo does municipal in Europe. Paques is a bit of an exception in terms of they provide worldwide a niche solution to take the total market there. Biological industrial wastewater treatment is a niche, but it’s a very important niche.
And they work with a vivo in north America. They work with Eliquo in the municipals in Europe. They work with our colleagues in the rest of the world. So there’s a good fit there as well. They actually have pretty clear profiles with more opportunity for collaboration then issues of conflict. So do we have overlaps every once in a while?
Yes. But is this a problem? No, they all know each other. They work with each other. We talk about it and we try to deliver what’s best for the customer, but the overlaps are, I guess I know probably all of the overlaps myself, and then it’s less than five to 10 situations a year.
Synergies between water verticals barely exist
Antoine Walter: If I’m playing the devil’s advocate here, you mentioned, for instance, Eliquo would be municipal Europe and Ovivo would be municipal north America.
And let’s say both have, I mean, they’re they have an incredible path. They keep growing at some point, both have to become global one way or the other.
Reinhard Hübner: No. That’s interesting. But:
In the municipal sector, every country is different.Reinhard Hübner – CEO of SKion Water
In Germany. We have 10 deaths that are so-called bill of quantity tenders. We’re an engineering firm designs, and we just execute.
We have an amazing team of blue collar employees who build the plants and do the work in the Netherlands. It’s a EPC like business, where together with the customer, the solution is designed. We and the customer design the solution. And then we orchestrate the delivery. In the UK. We’re a tier two. We provide court treatment technologies, for example, for nutrient removal in the US it’s more of an equipment business, large construction companies are the general contractor.
And they procure technology packages.
There’s zero synergies between those markets, other than knowledge.Reinhard Hübner – CEO of SKion Water
Is industrial water any different? (Spoiler: no)
Antoine Walter: You’re fully right. I took the wrong example. So let me take the other side of the story Ovivo is active worldwide in industry. And, EnviroChemie is your vehicle for industry. So those must be the overlaps that you are facing from time to time.
Reinhard Hübner: No, also almost never. EnviroChemie doesn’t do semiconductor. When EnviroChemie talks about ultra pure water. They talk about pharma, water for injection. When you’re asking an Ovivo guy about water for injection, it’s way too dirty to even think of taking it seriously, because what we inject into the body is far dirtier than what we need for semiconductors for good reasons dirty is relative, right?
Uh, you don’t want to inject distilled water into a body it’s not particularly healthy to have large amount of distilled water and semiconductor has absolutely nothing in there. So you drink a few liters of that, you die. That’s again, an example of where, yes, it’s both industrial, but there’s zero overlaps. The same holds for power plants EnviroChemie doesn’t do thermal power plants, Ovivo basically lives of its track record in the nuclear industry doing nuclear in the UK and a few projects that still happen because there’s not so much new builds and thermal power plants these days. So again, no overlap. So if you wanted to pick an overlap, it would be for Paques and Envirochemie.
Where we sometimes have the situation that EnviroChemie as a provider of complete solutions also has an anaerobic component and solutions, and it could be that they compete, but we talk about it. And in most cases it actually makes sense, now that Paques is part of SKion water to use the Paques technology.
But there’s also applications where EnviroChemie has a better technology like in dairy and then maybe Paques would use the EnviroChemie technology. So actually this works pretty well. We were lucky.
Becoming an agnostic solution provider with an unique positioning in the Water Industry
Antoine Walter: Very interesting. I think you explained why my concerns are wrong, even if I’m the devil’s advocate. So it makes a lot of sense! Regarding your strategy.
You mentioned that you want to be this company, which is the, um, it’s the agnostic large with multiple brands, solution providers. So. The Danaher, one layer up into the pyramid of the water industry. If you look at the vertical limits of that, where does it start and where does it stop on the product level on the bottom?
What would be the smallest particles into your SKion water group and on the top of it regarding the connection to the end customers, the consultants, and all of that. Where do you want to stop playing and say, no, that’s no longer our business.
Reinhard Hübner: That’s a really good question. Let me start on the top.
We are not an EPC who provides you a hundred million dollar desalination plant or who builds you a, uh, 200 million, uh, municipal wastewater treatment plant. We do the mid-sized projects.Reinhard Hübner – CEO of SKion Water
The largest projects we do are in the range of 50 to a hundred million dollars as an exception. The typical projects are a few millions to 10, 20 million. The semiconductor is on the high end, industrial, uh, is typically on the lower end with exceptions where we have 10, 20, 30 million.
SKion Water has built a category of its own
So we, we provide solutions ideally without civil, uh, construction to our customers where we are the one stop shop for say a combination of technologies solving treatment challenges that are little bit more unique than just a very large conventional plant, but where you have to maybe do lab work. Tests, try, engineer to find a solution that actually works and that intelligent detects the streams of parts so that you can recycle, recover, be energy efficient, all those things that’s on the higher end on the lower end.
If you go down the value chain, we are very careful in terms of backwards integration, because you can’t compete with your supply chain. If you compete with your suppliers, they will not like you anymore. So to invest into a product only makes sense for us. If there’s a distinctive advantage, or if it’s a segment where we think we have found something so unique that we actually want to just really have it for ourselves to give you an example of a small investment, we invested into Sentry, which is an innovative sensor.
… with a built-in flexibility when the opportunity is too good to be ignored
There’s a lot of benefit in the close collaboration we have with Sentry in terms of how to make the best use of that sensor, because we sell a lot of biological systems, especially anaerobic systems where the Sentry sensor has its strengths. And we figured this is a chance for us to have a closer relationship and work with them in a different way.
But also we like the sensor. And if nobody gives such companies a chance for funding, that’s also part of our mission that if you really find something that could make a difference, we also support it. So that’s a small investment, but they need to sell to our competitors as well. And we’re minority shareholder management owns the relevant stake.
We have a co-investor factory who are an amazing co-investor because they also care about deploying such solutions in less developed parts of the world, which is again, a good angle. So this was the set up that just worked very well
Which type of investor is SKion Water?
Antoine Walter: regarding this, this approach is something I’ve read on your website that you either go for ownership of the company or for minority investment, but with a significant size, is it because you really want to bend the shape of any kind of company would be investing it? I mean, bend not in a negative definition, but really to help them grow and not just be, you know, sitting in the back of the car and waiting for it to be a financial return.
Reinhard Hübner: If it’s a core investment, the logic for control is twofold. One is to manage these conflicts of interest that could happen because you actually have anti-competition laws that don’t allow you to just compare a lead list and share leads and so on. If you’re not part of a group, because that could be considered market manipulation.
Similarly in procurement, you can’t do it. To capture synergies. If you’re not controlling both sides, that’s one. The other is most of the time, it will also be difficult. If then we want to invest into further growth, like into EnviroChemie. We invested to buy additional companies, then each time you have a core share holder, you have this conversation about what’s the valuation who’s funding that investment.
And this way, if we decide we want to do an investment in the company, we can just do it without having to consider the impact on minority share. So that’s the logic for going for control.
Young companies also need to have an incentive to build their business. They need to be entrepreneurs!Reinhard Hübner – CEO of SKion Water
So you can’t, you shouldn’t take away control from them. And there’s something goes terribly wrong, but we want to help them. Right. We want to help them. We don’t want to form them, but we want to help them. And if it goes wrong or if it doesn’t progress, right. We also want to be able to intervene.
Where does SKion’s core start and stop?
Antoine Walter: Makes a lot of sense, but who am I to tell you if it makes sense or not, but just to tell you from my humble position makes a lot of sense. Within the SKion galaxy today, do you also do operation of plants?
Reinhard Hübner: We do mostly in Europe at the moment on the industrial side, it is something that has growth potential. It doesn’t have to be build, own, operate, right. It can also be just O&M contracts. Also in Southeast Asia, we do this and we have all kinds of service offerings also that are not exactly going all the way to operating it, but providing remote supports, uh, providing IT-based, uh, monitoring and, uh, optimization.
So there’s a broad range. In our core market so far, this has not been such a big issue or opportunity because the BOO BOT is not so interesting when you have endless supply of cheap money yourself as a customer, because we always have to add a risk markup. When we fund something and we’ve done that, and it’s also works.
And also typically industrial customers are not building completely new in Europe. They are optimizing existing and then they have their own personnel and they don’t want to like then have redundant personnel and person that doesn’t want to be transferred over to somebody other than their current employer in many cases.
But this is changing. There’s more and more of this coming up and it’s an opportunity to also. Yeah, improve the way plants operated. In many cases, we see this when we operate the plant before hand over the performance is better than when we hand over. Because for our customers, the core business is not treating wastewater or water, the core businesses to do something else. For us it’s the core business. So obviously we have personnel that has more experience. And, uh, also we, we have the backend that can support. But we’re also setting this as a service to support them.
You can’t just copy past business models from one geography to another
Antoine Walter: It’s very interesting, but what you mentioned about the specificity of the, of the European market, because I’ve been discussing on the, on that microphone with several companies like Axine water, which are very present in the north American markets and which are really building upon this, uh, wastewater treatment as a service or water as a service, and even though it is emerging in Europe, it’s maybe not yet at the same level, but where I wanted to go with that question was a bit more of a flashback to 10 years ago.
Because you were building SKion water room from scratch. And if you had asked me to build a company from scratch, I would probably, and I’m probably wrong. I mean, you’re proving me that I’m wrong, but I would not have chosen your section of the market. I would have went for operation, which seems to be the thing which delivers better margins, which is stable over time.
Reinhard Hübner: From a risk return profile, you are right.
We take pretty high risks compared to the returns we make.Reinhard Hübner – CEO of SKion Water
When we deliver complete treatment solutions. There’s a lot of service business in our business as well. For example, EnviroChemie is more than 50% services. There’s different ways of doing services, right?
You operate or you provide consumables and maintenance and what have you. So that’s a broader range of answers to this.
We wanted to have the ability to also bring new solutions into the market. And for that, you need to actually deliver the technical solution, not just operate it.Reinhard Hübner – CEO of SKion Water
We happily will operate and it’s a growing market segment, for us to operate.
There’s also systems where we basically get paid by cubic meter treated. By the way, in the Corona crisis. Some companies run the hard way that when all of a sudden manufacturing stops because factories are shut down. It’s not so nice to just have all your revenues be paid by cubic meter treated, uh, because when there’s no waste water anymore, you get no turnover.
It’s, it’s a mix. And the operation segment is growing.
SKion Water has three ways to partner with a Water Company
Antoine Walter: You mentioned how SKion water is a perfect partner if a company has, let’s say its ownership, is going to, uh, to just retire and maybe have this succession company. There’s another path which you, you, you mentioned with this startups, you’re investing in with this minority shares and all of that.
And there’s a third path, which is listed on your, on your website, which is licensing. Like at this time you have the technologies and you’re looking for partners to develop in markets where you would not be present yet. From those three paths, which is the most important for you in terms of business and what is, how would you intend to develop that in the future?
We will continue to buy companies. We buy four to eight companies every year.Reinhard Hübner – CEO of SKion Water
Reinhard Hübner: Some of them are publicly announced some not, or just announced the local markets, because there’s so much opportunity there. Find great companies that are a fit with us and we have sufficient amount of pipeline there. So that’s just the core of how we do it.
As long as the evaluations are meaningfully acceptable, we are very happy to collaborate. Again, this links back into the fragmentation of the industry. We don’t intend to rule this world.
We will not rule this world. And since we’re dealing with real problems for society, collaboration is the name of the game.Reinhard Hübner – CEO of SKion Water
And we do this in countries where either we can’t buy anybody or we don’t want to buy anybody, or we just happened to find a good partner. Paques has historically worked with partners since its beginning, for example. So there’s a great partners across the world and EcoPreneur was Paques licensee. And then we bought Ecopreneur.
And so this was the other way around, right. They started as a licensee and then we bought them when they were for sale. We have great partners in various parts of the world, like China, the middle east, and some other countries also that we work with at the SKion water level to bring solutions to the market that are meaningful for that market segment.
What’s in the investment pipe for SKion Water?
Antoine Walter: You just said that you have a list of future investments. I’m not asking you to disclose that list right now. To understand your approach. If someone is listening to that and say, Hey, I’ve read a cool company and I need to reach out to Reinhard. Not because he can help me out. That can be the decisive step into my entrepreneurial journey.
Is it something you’re happy to receive, like receive some pitches or are you more of a hunter and you want to, you’ve seen that company and you know, that that is something you need.
Reinhard Hübner: We started as a hunter when we had not this reputation in the industry, we went after companies Ovivo was a cold call. We had no relationship whatsoever.
We did our analysis for the north American market and we just went and met the chairman and the CEO and said, we want to privatize you. And within a few months, we had worked out a deal that then also included the pension fund CDPQ as a shareholder who would stay And we privatized Ovivo without even employing an investment bank on our side.
So that was hunting, but many good companies also approached us. Because they heard of us. When we bought what used to be called KG Nellingen in Germany, now it’s Eliquo KGN which is more the drinking water side of our municipal business. They had an offer from a large corporate to get acquired because they also long-term had a succession topic.
And they heard about our reputation and how we do this in the German market from Eliquo Stulz. Then they approached us and said, well, we want to talk to you to see if this is an alternative. And it ended up being the alternative. Uh, so it’s a mix. And increasingly with, with how well known we are, we get approached and we will look at every proposal.
Everybody will get an answer in a relatively short period of time. And we’ve come across amazing companies from cold call situations. Also some of our partners in the world, they just cold call found us on the internet and approached us. And, uh, it’s turned out to be extremely successful relationships.
So yes we are available.
Walking the Talk: Executing on an Investment Strategy
Antoine Walter: So that was Reinhard Hübner the investor, which we’ve been discussing now for some minutes. There’s another part of you. It’s interesting to understand how you do all of that. If I understand it rights and you’re going to correct me, if it’s not the case. When you’re making these kinds of big bets into some companies, you also support the execution.
You are still or you’ve you were the director of Ovivo. You are the managing director of Eliquo. So how does that come into play? How do you, at some point, just change your hat and say, now I’m executing on the plan and I wants to grow that portion of the business.
Reinhard Hübner: Everything has a history. And obviously
I can’t complain about anything we have because I was involved in acquiring it. Obviously the execution must be part of my job.Reinhard Hübner – CEO of SKion Water
Eliquo was initially out of bankruptcy. It was an insolvent group of companies in the German municipal sector. We picked up in an asset deal. Thousands of projects. And 250 employees and made it a company again. So initially I was actually really managing Eliquo after we picked up the assets. By now, my role as managing director is more the admin role, uh, in the holding to do some of the paperwork or sign some of the paperwork and it’s run by its management team.
So my involvement is very limited. Ovivo has a board, it’s our largest asset. So obviously I’m part of the board of Ovivo. And the board also has independent directors who are adding amazing value in this case, because it’s a great board, but I’m not managing Ovivo by any means.
You have to jump in the trenches when needed
But we are entrepreneurs and if things happen, they happen. So at the moment, I’m also acting CEO of PaquesReinhard Hübner – CEO of SKion Water
because we had the departure of the CEO. And so in the interim, until there’s a new CEO, somebody has to do it. And I was on the board of Paques for 10 years. So that’s me in this case. Now this obviously means that I only do this part time and I still do my main job, but we are pretty hands-on and when somebody needs help, we will help.
And if an intervention is needed, we will also do the intervention. Thankfully there’s not many interventions needed, but this is kind of how, I mean, again, I’m a part, I’m an operations guy, right. So I also enjoy to be on the front lines every once in a while.
What are water entrepreneurship best practices?
Antoine Walter: Let me leverage this hands on aspect. I’m wondering now, really from very far up to all of that, I’m wondering if you could identify like best and worst practices when it comes to water entrepreneurship and maybe also water investing, would you have some of them to share? Of course, I don’t want to disclose the secret sauce, I guess.
Reinhard Hübner: Look, I mean, at the end of the day
It would be good for the water sector if all the money that’s poured into it has an impact as a consequence.Reinhard Hübner – CEO of SKion Water
There’s no protection of anything here. I think it’s important to face the realities of this industry. And the reality is up to quite an extent in terms of go to markets contained in what’s, Paul O’Callaghan did his PhD on that.
It is a difficult market. It’s slow, it’s fragmented, and you need to really understand. Your value proposition is. And if you understand that you can define the right strategy for how to make it happen. Let me use one or two examples. If you have to develop something that is an improvement of something that exists today.
Know your worth: what’s your water company made of?
A more energy-efficient de-watering device or something. In that case, it’s this thing that needs to be integrated into a complete solution. The advantage is not like going to be 20, 30% because there’s the laws of physics. Go find a partner that already is active in the segment and partner up with that entity.
Don’t try to do it alone. If you have something really unique, you can try it alone, but don’t get yourself investors that think you can expedite it by throwing more money at it, because then you will burn through that money. And everybody will be frustrated. Everybody. We pushing you to pay that money back and more crazy things will happen.
Instead of saying this will take time, we only need to keep the cost base, small, get as many grants in as possible, minimize the burn rate. And at some point we will have a break even, and then we can start to grow. Cembrane never lost money for example. They managed to do a capital intensive thing like ceramic membranes without really losing money, but they went slow. Step-by-step very methodological.
You can throw money at it. It won’t grow faster. It will just burn more money.Reinhard Hübner – CEO of SKion Water
And this it it I think: uh, be realistic, don’t try to do it all yourself, collaborate, find the right partners. There’s great people in this industry. This is what attracted me to it. That there are so many great people who are passionate about what they do and many are open to collaboration, but sometimes you have to just give up the dream of building this company and selling it for a hundred million in a few years, because in all reality, maybe it works and then it will be gobbled up.
You have to be in water entrepreneurship for the long run
But this will not be a long-term success in terms of in the market because the product will then disappear at some point, or it would be a failure. Think about what you want to achieve. If you want to make a difference, find the right path for that. And every once in a while, there’s the, the super cool technology that will make a major difference.
You, you can actually make happen as a startup. And the same also goes for what kind of owner is the right owner? Is it somebody who wants to flip the company in four years and needs to double the profitability or turnover in four years? That’s hard. It only works by taking risks. You can always grow revenues, but the question is at what risk and at what margin, and if you grow revenues very fast, at some point when the projects are finished, you will pay the price.
Pitching to Reinhard: a Worst Of
Antoine Walter: Regarding these owners, I’m really curious. You say, you now, receive more pitches now that you’re established in that market. Do you see many pitches from people who just have read from zero to one or the four hour work week or this kind of entrepreneurship staple book? And that’s happened to try to do it in water because from a marketing perspective, billions of people lacking access to water must be a blue ocean of something.
And then that make you awesome pitches with hyper-growth strategies because you could be just winning the market and you have to cool them down and tell them. It’s a special sector.
Reinhard Hübner: When they’ve reached that point, you can’t cool them down anymore. They think I’m a crazy conservative idiot. Right?
You can classify these business plans by the type of substance that was consumed for making up the numbers.
The craziest I’ve ever gotten was something based on cavitation technology. Zero turnovers now. In five years, they wanted to do a billion in turnover and 600 million in profit.Reinhard Hübner – CEO of SKion Water
I mean, you look at this and then they wonder why you don’t want to talk to them.
And it’s hard to stay friendly in such a conversation. I don’t know. I don’t know what to say. I’m speechless, right? I mean:
Crystal meth is surely not good enough. I want some of that stuff for my next party. but it’s probably toxic!Reinhard Hübner – CEO of SKion Water
Is it craziness or genius?
Antoine Walter: If I tried to be again, the devil’s advocate here, because I’ve heard you mentioned that, that one on with Will and Tom on there in their podcast.
And it was like, okay. Um, 99%. I agree. But if I try to play out the one person, if you look at the iPhone, the iPhone comes out in 2007 and everybody says, Steve jobs, a genius. And you look at what IBM did in 1993. And they had this touch screen phone, which had most of the features of the iPhone, of course not the same size and everything, but they were just right.
10 years too early. And the same set up of people. Maybe if you had put them in Palo Alto in 2007 would have done the iPhone and maybe we wouldn’t know the iPhone, but we would know the IBM one. What I’m trying to say is that maybe everybody was wrong about cavitation or was even right about cavitation, but the stars were not aligned for it to become mainstream.
And right now is the moment and you missed it because you thought they were on crystal meth.
Reinhard Hübner: Ok, good point, but the question is: what are we trying to solve? The iPhone invented a new kind of thing that wasn’t there before. It’s completely blue ocean agree. In water, most people like you and me. We want safe water to come out of the tap and we want it to go down to the toilet and an environmentally friendly way. Anything else we don’t care.
And nobody wants a portal where you can see a water consumption on the daily basis on your phone. Nobody wants all kinds of fancy gadgets to interact with your water utility. You want it to work. On the industrial side. That’s a bit more complicated, but you also just want it to work. This limits, when you move large amounts of water around as to how sexy you can make it. At the end, we are still a concrete, plastic and steel industry because the vast majority of the assets is the pipes in the ground.
You can’t manufacture a market need
And the basins of the plants treating the water. Now does it mean that that’s not amazing stuff out there? There is amazing stuff out there, but in a fragmented industry, you will never grow that fast. And sometimes also you should really challenge the basic underlying scientific principles of what you’re saying.
When somebody tells me that the electricity consumption of an iPhone, and I’ve had that case, is good enough to remove PFAS in relevant quantities from water. And this is against the laws of physics and chemistry. Same as you claim, you can do desalination without energy. Everybody has to deal with the osmotic differential and no scientists can find the workaround.
The only question is can you find waste energy or something that you can use to make it theoretically, be energy free. It’s not energy free, never and stick to first principles. And then the claims implode, and also everybody tries to do gasification of sewage sludge. It’s a really interesting technology, conceptually, because you directly converted to gas and then you can use something with that gas.
Even the broadest open mind has its limits
Everybody who’s tried so far has failed because of one simple thing, which is the ash melting point of sludge, where you get tar formations, and then you have a very dirty gas and then it becomes expensive. We are really open-minded, we looked at 10 to 15 installations ourselves. We went to the installations to take a look because we really wanted to find one, but none of them is still working.
So can, this miracle happen? Maybe. But at least be humble and think about all the people who have tried before and failed and find out why you will make it. And what’s different between what everybody else tried. That’s maybe a bit, the, uh, the summary, one of our values is curiosity at SKion water. So we really try to look at anything that is proposed to us.
We look at it, but we also treat it with a grain of salt. And if then they can’t even tell us how it compares to established technologies, what the energy balance and the mass balance is and how that compares to established technology. Then maybe do your homework and do a proper energy and mass balance before, because any customer would want to see an energy and mass balance as well.
How to capture water innovation from academia (and turn it into successful water companies)
Antoine Walter: Do you also look at what is done in the university and academia, because there are not that much hotspots in terms of, of water and university. So you could be monitoring them quite closely. And sometimes they have technologies which are mind-blowing, but they are maybe not the right entrepreneurs to develop it.
So maybe you could be the entrepreneur?
Reinhard Hübner: We collaborate with universities. We are very well integrated into the dutch water sector for example, with, Waveningen and the Delft and Wetsus, we also work with several German universities, do research projects together with them. And this is also a good pool of employees for us when they graduate those students we work with in this project.
We have done work with the university of Washington in Seattle, for example, uh, at Ovivo on a technology development. Uh, so, so we, we do work with different universities and also we are invested in the Emerald water technology funds. Uh, so this way we get access to the venture capital scene, uh, with locations in Singapore, Europe, and north America.
So that’s also. Extremely helpful in terms of seeing things. So, so yes we do. Can we do a bit more? Yes, but also we are fully loaded with customer work. So there’s limits as to how many of these research projects we can engage with in parallel.
Doors for the future: Venture Capital
Antoine Walter: Okay. I’m not opening the venture capital door because if I do that, then I have to pick one more hour of your time.
So maybe that is something for sequel. Last question for me in that deep dive is what do you see as the future of SKion water? If you look in five or 10 years, what will tell you? I mean, 10 years is the double of your current lifetime. So let’s say one year you reach that milestone. What tells you that you’ve succeeded?
Reinhard Hübner: For us, it’s not about size or anything. We want to be perceived by our customers as the group that solves, their water and wastewater challenges in a innovative and environmentally sustainable way. And we want to be able to also really solve their problem and support them with operations and maintenance.
And what have you. That’s one, hopefully there’s a list of young technologies that we manage to support on their path to adoption. It can be that we only supported them for part of their journey. And that’s, it. It can be that we are just a customer would maybe, maybe we were the first customer or the second customer, but still, it would be nice.
Maybe also we own a few of those, uh, but that’s not what it’s necessarily about. And in an ideal world, what we are still working on is also to how to bring solutions to less developed parts of the world that are. Affordable enough to not require, say subsidies or grants, or what have you. We have started this work with the Cembrane membrane on borehole water in contaminated Wells in Africa.
We had the first iteration on this, but the product is not robust enough yet because the ambition is that the product is basically everything else around the membrane is produced locally and integrated locally. And we wanted it to be basically a bucket that can be hand operated with a membrane in there.
So high-tech, and low-tech combined first version works, but I think it’s not robust enough yet, but
This ambition to also do something in those parts of the world where people are less fortunate in terms of quality and quantity of waterReinhard Hübner – CEO of SKion Water
that that’s also part of it. And if in 10 years, there’s this group that maybe is by then still a somewhat bigger. But especially still this group of people who like to work together and work together because of the passion for water and makes things happen, then that’s success.
How does Success look like for SKion Water?
Antoine Walter: I think, I’d like to see that success. It speaks to me. So I guess, um, I see what you, you, you call that success
Reinhard Hübner: at the end of the people. I mean, this is an experience-based industry.
It’s not the iPhone is a product. I mean, you need great people to develop it, but once you’ve developed it and marketed it, you just need to have a contract manufacturer to manufacturer it. And you’re trying it out. This industry. The knowledge of the people is required for every solution. Every solution is different, especially on the industrial side.
Every challenge is different. And these experienced engineers and technicians who afterwards built the plant and make it happen on the ground. Our also our installation crews, they are the ones with their experience. We’ll make it happen. It’s not like there’s this one genius who develop something and then it happens.
Antoine Walter: Reinhard, thanks a lot for the openness and for everything you’ve shared in that deep dive, if that’s fine with you, I propose you to switch to their rapid for questions. Yes.
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Rapid fire questions:
Antoine Walter: So in that last section, I try to keep the questions short and you can keep the answers short as well. And that all starts with what is the most exciting project you’ve been working on?
Reinhard Hübner: In the past, the most exciting one was the privatization of Ovivo, because that was a wild journey. Right now, I would say the piece we want to do on the developing market side is super exciting because success is measured by finding something that. Stand-alone viable and scares because it’s affordable. And that is really a challenge that is robust and affordable. And also obviously it’s something that we do next to the day-to-day work of dealing with customers.
So I’m really excited about that. One.
Antoine Walter: Can you name one thing that you’ve learned? The hard way
Reinhard Hübner: we learned the hard way, how slow technology scale, and we lost significant money trying to do this with our first investment. So that, and. How much it is just people-driven and how you can still, after many years misread people or, or not get the full story when you’re not close enough to also more people in organization.
But overall on the plus side, again, it’s people, there are so many passionate, uh, amazing people in this industry. That’s, what’s so enjoyable about water.
Antoine Walter: Is there something you are doing today in your job that you will not be doing in 10 years?
Reinhard Hübner: If you continue to grow, like we grow, I will probably not be managing director of any of the operational entities anymore in 10 years.
Antoine Walter: What is the trend to watch out for?
Reinhard Hübner: I think there’s a lot of potential from digitalization and everybody talks about it, but it needs to be done the right way. AI doesn’t solve the world and it’s a black box, but there’s a lot of potential there. So I would say that’s one of the strongest trends.
But the other one will be still closing loops, decentrally more decentral recycling recovery, more decentralization, uh, different architecture of, uh, also urban infrastructure compared to what was built historically.
Antoine Walter: Plus, there are good chances that these two trends walk hand in hand, because if you work decentralized, you need to be digital. Digital is not, I would say, a strong, vertical into SKion right now.
Does that mean somewhere in your stack of companies yet to acquire or something you’ll build organically?
Reinhard Hübner: No, we, we don’t announce everything we do. Uh, we bundled our digital activities into a company in Canada called in control. And, uh, with them, we develop both solutions for our internal optimization of treatment systems and so on with the tools where we also sell and provide something.
Customers and other industry partners. For example, we have a solution called ops control, which is a base solution for operator support that gives video instructions and manuals, and, but also allows to do operate around, but also it also remote control plants and this, we are open to provide to anybody who’s interested in using that.
Because again, it’s not about us ruling the world. Uh, it’s about helping our customers operate the plants. And we are very well aware of the fact that they also have equipment from other vendors and plants that were built by others. But at the end, we want our customers to succeed with air plants. And we’re happy to open this up to other players in this.
Antoine Walter: So you said it’s not about you ruling the World still. Here’s my second last question. If you were a word political leader, what would be your first action to influence the fate of the words? Water challenges.
Reinhard Hübner: This is super controversial, but we need full cost recovery. If the systems can’t pay for themselves, based on the fees they generate, they will always be influenced by politics, by budget constraints and what have you.
And the success of the countries that have a very well-functioning utility sectors is also full cost recovery because at the end, it needs to pay for itself. We accept that, everybody pays for electricity. Everybody pays for internet. Uh, not just for the cost recovery, but also healthy profit for the providers and then water.
They can not even recover that cost in many countries. And I’m not saying we need to privatize the water sector for that. That’s not the point, but utility needs to be able to cover its costs from its revenue and not be depending on begging for money somewhere
Antoine Walter: three short thoughts on that. First, I fully agree with you and you have to know that we are a minority.
So every time I’m mentioning that I’m told that. I’m a bad capitalist devil for saying that. The second thing is, I don’t know if you’ve read David Lloyd Owen’s book, Global Water funding, but he’s making the case about that. This a cost recovery aspect is very important. Something we’ve discussed on that podcast microphone as well.
And yeah, actually I’ve condensed my one and my three together, but I was giving a conference last week at a university in France and all the questions toward the end of the conference were leading towards, you know, you’re, you’re just supporting big capital when you’re saying that water should have a cost.
What’s the next thing we, we should pay for air or whatever, and people are really mixing this element of paying for water and paying for the treatments. It involves to purify water, a different stakes in the water cycle and also conveying the water. So. Long side track from my end. Sorry, but just to say, I fully agree with you and it’s good to hear,
Reinhard Hübner: You can see this. I mean, wherever people don’t pay for water, the consumption is substantially higher. When east Germany United with west Germany and water meters were introduced, consumption, collapsed. And if you look at the UK or Ireland where there’s no proper metering of end customers, in many cases, you have much higher consumption, much higher water losses.
It just doesn’t. There’s this thing with Adam Smith and diamonds and water, right? Diamonds have no value in use because they’re utterly useless. At least when you have them as a person, I mean, industrial, you can use them as a very sharp, hard tool to cut things and so on. But when you have a diamond, it’s useless, right?
But you’re willing to pay a lot of money for it. With water. There’s a lot of value in use because without water you die, but still a mankind is not willing to pay for water.
Antoine Walter: That’s what I’m going to steal from you. I didn’t know that exact one
last question. Will you have someone to recommend that should definitely invite on that same microphone as soon as.
Reinhard Hübner: I can give you two different people, um, that I recommend. One is Victoria Edwards of phyto. Uh, she’s doing leakage detection in a very innovative way. And leakage is one of our biggest problems in terms of the amount of water lost.
And she’s also an amazing entrepreneur. The other one is Ulla Pöschl from our portfolio doing advanced oxidation, uh, for very nasty wastewater. She also has a journey of how difficult it is to get a startup to success, because it was the first startup with the technology. When. Uh, and we were in touch back then, and now she’s part of our group.
So she can also tell you about the hard way a startup can go wrong, but still she’s now part of our groups. So in the end it worked out.
Antoine Walter: Well, awesome recommendations. Thanks a lot. Thanks a lot for this how’re we spend together, I learned lots of things looking into the path of, of ski on and everything you shared.
And again, thanks for the openness, because I know that some of these questions you could have simply answered by, sorry. I’m not disclosing. So thanks for sharing.
Reinhard Hübner: No problem with that! At the end. Uh, I hope it’s interesting for those who listen and anybody who wants to collaborate or has an idea can happy to contact me
Antoine Walter: where they contact you the best?
Reinhard Hübner: Info-at-SKionWater-dot-Com.
Antoine Walter: Perfect. So like always the links to that are in the show notes. Well, thanks a lot then talk to you soon.
Reinhard Hübner: All right. Thanks a lot. It was a very inspiring conversation.