Paul O’Callaghan, CEO, BlueTech Research joined Travis Loop, WEF, in his podcast Words on Water and shared his thoughts on current water industry trends, water issues, circular economy, and the meaning of innovation.
Travis: Hi Welcome to words on water, a podcast from the Water Environment Federation. This is Travis Loop, the host, and today Paul O Callaghan, the founder and CEO, BlueTech Research, joins me. How are you doing today?
Paul: Great. Thanks, Travis.
Travis: I am happy to have you here in Atlanta from your home of Ireland to help Water Environment Federation Meteor Meeting talk about innovation and technology and all those fun concepts. So glad to find some time to talk with you here on the podcast.
Paul: Absolutely great to be here.
Travis: Could you start up by just telling our listeners about BlueTech Research?
Paul: Sure. We are Water Technology Marketing Intelligence firm. And we focus on analyzing the water sector, trying to anticipate, what the drivers to change are, what major dramatic shift change over time and then based on that to identify, the real opportunities to innovation, where should people be looking to create solutions, we find particular solutions for end-user needs. We work quite a lot with entrepreneurs and corporate investors.
Travis: How long have you been around?
Paul: I have been in the sector for 20 years. BlueTech Research was founded in 2011.
Travis: Could you talk quickly about your relationship with Water Environment Federation and your work with us?
Paul: Sure. We have a great partnership with Water Environment Federation that is going on 6 years now. We held a first Innovation Pavilion with Imagine H2O at WEFTEC and we do that every year. We expanded that into other innovation programming elements and we also currently have a visiting fellowship program with Water Environment Federation where one of our team members is allocated to foster collaborations and chain information between groups.
Travis: Okay. So what I wanted to start with you today is about this word “innovation”. I like to ask people about just the word “innovation”, what it means to them because you hear it so much and some people might say “Oh, it’s just a buzz word” or “it may be overused” but what does innovation mean to you and what does it mean for something to be truly innovative?
Paul: I think it either has to meet a need or it has to deliver its own value. I borrow on something I heard Edward De Bono saying “A door which opens up and not out that’s not innovation that’s just a different type of door”. Unless there is some inherited advantage to what you’re doing, it’s just different. And being new for the sake of being new is not innovation.
Travis: So it has to serve some different purpose or deliver some different end?
Paul: Either it has this pain point there currently which is not being addressed whether that’s energy use, chemical use, perhaps an operational headache that this new innovation fundamentally hits a pain point or maybe a bottleneck in an existing technology, that’s what we look for, what’s holding something back and what can unlock it and let it go forward. The second part might be some new or emerging crisis. It could be antibiotic-resistant bacteria or emerging contaminants and something that can deal with the emerging issue.
Travis: Does something have to be disruptive to be innovative?
Paul: No, quite a lot of what we see is sustaining innovation that makes something that’s already there, more efficient and that’s what we call value-driven innovation at Blue Tech. We classify things as value-driven whereas their improvement is something that’s there. Perhaps they lower the energy use, so no they don’t all have to be disruptive at all by any means. In fact, the biggest disruption potentially we see in water is more at the systems level rather than technology level, that’s where disruption can really take place.
Travis: Can you elaborate on that, what do you mean by innovation at systems level?
Paul: Sure. Our current water system is centralized. A use-once approach to water, little or no energy, resource recovery, whereas what can disrupt that system is moving towards decentralized treatment resource recovery energy generation, maybe, point of use treatment, zero liquid discharge, zero water factories. Those ideas and concepts, including, say, direct potable water reuse, they are innovations and changes in how we manage water but can be enabled with existing technology.
Travis: So “technology” is another word I want to talk about. Technology is increasingly a part of our world, daily lives and every sector out there. What have you seen as far as the water sector stands in harnessing the potential of technology and embracing it and advancing it, compared to some of the other industries out there?
Paul: I often think water is like an open economy. It’s not a closed thing, it’s anything that touches water, we’re not buffered or insulated from what’s happening outside of water, so where you see major advance is biotechnology or IOT, digital or advanced material science, they often find ways of affecting water. Whether material science or nanotechnology can lead to a better membrane, we see that happening. Or advances in medical biotechnology, like metagenomics, are leading to a much better understanding of what’s happening in wastewater treatment plants, and digital is enabling us to be more efficient in operations. So these macro-level trends find their way into water as well.
Travis: That’s a very interesting point in perspective in how water is so integrated in everything else in our society so those adoptions and technologies and innovations are all woven together in a way. What is the rate of change in the water sector when it comes to adoptions and technology?
Paul: I think it’s accelerating. 8 years ago there was the first talk about energy from wastewater, energy neutrality. And now, 8 or 9 years on you can point at 30 or 40 plants in the US alone that are energy neutral. So we are shifting and changing bit by bit slowly over a decade. But before you know it, energy neutrality is the “norm”. We accept potable reuse water now. I’d be optimistic about the level of change.
Travis: Patience might not be a strong suit for us these days. It’s a very fast-moving world. You are used to quick results. You have to take a longer view when looking at the change in the water sector instead of thinking things aren’t moving and realize they are over time.
Paul: Yes, it’s not like a smartphone. In water, it will take longer but it happens faster than you think. Before you know it, that 10 years have elapsed and the things you didn’t think about are now mainstream.
Travis: A lot of our listeners are in the US but we do have some international users. How would you compare what’s happening with innovation and water tech in the US to other countries in the world?
Paul: Firstly water is a local issue, people see it as a global issue but it has to be dealt with city-by-city, town-by-town, and state-by-state. So you could take what’s happening in California, Arizona and New Mexico and Florida in water reuse and that’s cutting edge. Certain in-building reuse that’s happening in San Francisco is the leading edge in innovation thinking around water reuse. Then around the great lakes, the issue might be nutrient enrichment affecting algal bloom. So they’ll be moving quite forward with that particular issue. We do see some policy differences between regions, for example, Europe is pushing really heavily the circular economy as a theme, that is having an effect on Netherlands, Germany, and Sweden. This whole circular economy shift towards resource recovery energy reuse, I would say Europe is a bit further ahead currently. That’s also being adopted by corporate end-users like PepsiCo, Coca Cola, Nestle, and Unilever. That tends to happen more globally across all of their sites whether they’re in Africa, Australia, or elsewhere.
Travis: The circular economy was one of my next questions. This is a term that’s out there, could you just explain that a little bit more?
Paul: Sometimes the names we use to describe things shift. Smart Water is now IOT, energy and resource recovery is now circular economy. The circular economy is a way that companies can embrace sustainability but have the economic aspect to it, but wasn’t too purely environmental. It’s about doing things more efficiently, using fewer materials to begin with, and the ability to recover and reuse those materials and of course whether that’s water or a raw material or the energy that goes into those processes. It ties together energy, waste, and water. The challenge in circular economy is how to balance all three. Reuse your water but then deal with the waste. Reuse your water but then don’t use too much energy. Reduce your energy and so on.
Travis: I’m going to ask you about a couple of other things such as the capital venture model of the success/fail chug along rate that you see, could you talk about that? What’s the usual percentage breakdown of a new venture where you see it in the water sector and the analysis you did there?
Paul: We thought it would be really interesting to compare what a typical venture capital investor might like to see in their portfolio versus what BlueTech was able to analyze across the companies that we’ve been tracking or a number of years now and a typical Venture Capital can expect that 20% will be success stories, 20% will fail and the remaining 60% will stick around and will do “okay”. When we compared it to 85 companies over a 10-14 year period we found the success rate was lower. Of course, we measure success by a company being acquired by a larger group in a non-distressed state or it was doing more than 10 million dollars in revenue a year. About 12.5% succeeded, 20% failed which was the same and about 67.5% were still around, they were able to exist but not break through.
Travis: What are your thoughts about the different percentage in water versus capital venture percentages?
Paul: Sometimes when you’re looking at an individual company, the company itself may not succeed but the technologies are succeeding but often times the first investor may invest and then not have enough capital or patience and 5 or 6 years later that company disappears and somebody else picks up the baton. There was a naivety around WaterTech in 07,08,09 there was a hype of the CleanTech boom, people were jumping in and maybe had a misunderstanding about the nature of the space. There’s a lot more reality coming to bear now. Going back to our definition of innovation, you must have a very clear value proposition or know what you’re doing and understand the market timelines. Being in the right place at the right time so if some regulatory change comes in that creates a marketplace for you. Part of it is a learning process for smaller tech companies who need to innovate themselves too.
Travis: I think this is when you brought up the idea of trying to be the 2nd mouse.
Paul: Yes, on top of that analysis we layered in the companies we had selected to attend our annual BlueTech Forum since 2010. Now we like to think we’ve got a good eye for spotting promising technology trends and we were pleased about the 27.5% of our companies had succeeded or doing better than industry average. We were also doing better on the failure rate, 37% were failing. So we looked closer and I actually do remember seeing these companies are still around and the technologies are still around. We could see in quite a few cases like the Forward Osmosis Company, HTI may have disappeared. Maxwest was pushing gasification but that was then picked up by PHG and that led us to observe that it’s not considered the “early bird gets the worm”. In water, it’s often the tortoise and not the hare that wins the race.
Travis: I wanted to touch on a few of the key areas when it comes to resource recovery and get your thoughts about the current landscape, what’s interesting, what are your thoughts on water reuse?
Paul: There’s been a big increase in general water reuse and non-potable water reuse. The amount of installed capacity has grown enormously over the past decade. Some of the low hanging fruit in terms of the ability to reuse non-potable water on irrigation golf courses, sports grounds or the cooling of nuclear power plants and that’s been exhausted. Then you find yourself in a situation where you are looking for other outlets, which may require dual infrastructure, pumping water longer distances and that’s leading people to look closer at potable water reuse whether that’s direct or indirect potable water reuse and the constable of one water is emerging where it doesn’t matter where it’s from, it’s all a source of water that can be used. A few things that are happening, I think there is better data around water quality available now. We can measure things more accurately over time. As we do that it gives consumers confidence in reuse quality water, the other side of that coin is that it potentially raises concern about quality potable drinking water. That narrows the gap around potable water and reuse quality water. Good information can raise concern about and give confidence in the other. Therefore I think we’re likely to see increased acceptance of that and reuse within a building level and the whole decentralized concept bringing it right down to reuse in a building which can be seen in California, Australia, Singapore and elsewhere.
Travis: What is the current state of play for energy regeneration at the moment?
Paul: A lot of the buzz was around that there was energy in wastewater and the awareness that you could harness it. Bioelectrical systems appeared they haven’t quite made it through yet. A lot of talk about carbon-diversion, that is making its way through a bit more, but where the energy is at is really in the sludge and bio solids and the workhorse there is anaerobic digestion and that is allowing many plants to make the leap to energy neutral but usually by taking in some other form of organic waste, co-digestion fats, solids and wastes. So in the future you could see that wastewater operators could become organic waste processors with their big centralized facilities and they will take in organic waste from communities. Strass in Austria was one of the first plants to tear Energy neutrality, Aalborg in Denmark also. There are smaller examples, which are less high profile around the US. Point de Lac for example and others, which are using metagenomics and biotech to enhance their digesters to increase biogas by taking wastes.
Travis: With Nutrient Recovery, what is going on there?
Paul: Again it ties into circular economy and of course once you start reusing your water and recovering your energy you begin to look at nutrients increasingly. They have to be removed to meet nutrient discharge consensus and can you create value in doing that. We’ve certainly demonstrated that this is now possible but 10 years ago in 2007 there was only 1 or 2 struvite plants in operation in all of North America, now there are nearly 2000. So that trend has proved it is technologically possible, how far it’s going to be able to go economically is yet to be seen. When we think about circular we think about the space station as the ultimate circular economy.
Travis: Part of advancing the innovation is getting the story out there, what are your thoughts on that?
Paul: I’ve been involved in Partnering For Impact an initiative that WEF was pioneering and I became involved in a story-telling committee and how the water sector as an industry can do a better job of articulating our own story. Too many of the stories that are told about water are quite doom and gloom, about wars will be fought about water “it’s the next oil”. But there are reasons to be optimistic. People are hardwired to connect with stories and if we believe and engage in that it becomes easier for policy makers and politicians, then it becomes easier for utility managers and we’re working on that concept and how we can tell these positive stories and hopefully have an impact through that.
Travis: Paul I appreciate your time. I’ve really looked forward to talking to you. Thank you so much.
Paul: It was a pleasure. Thanks, Travis.
Listen to the full podcast here.