How FlumeWater CEO Eric Adler grew FlumeWater to $6.4M revenue and 4 customers in 2024.

you're gonna love this interview just got done editing it i'm glad i got it live for you i'll be in the comments for the next 30 minutes hanging out answering any questions you have in fact leave a comment below about data points or what you think is going to happen to the company and i will respond to every comment additionally if you're just loving the content click the thumbs up and i will go and check out your profile as well and give your videos some love as well in the meantime enjoy the interview hello everyone my guest today is eric adler he is a central oregon native cal poly graduate and startup founder with a passion for entrepreneurship whether it be building a tech company from the ground up investing in real estate or flipping cars on craigslist he's got a desire to construct his own success and inspired and that's this has inspired his actions now building a company called flume water an intelligent water monitoring system eric you're ready to take us to the top yep i am let's do it all right so i mean you know this is great you're a hustler you're a capitalist but i mean what got you into water monitoring well guys under water marching was the drought in california we started this as a cal poly senior project back in 2015 when california realized you know basically how screwed they were because we have limited water resources and 38 million people living in the state so you're trying to figure out a way to basically help people understand how much water they're using and kind of bridge that gap okay so how does it work is it a peer play sas model or just a hardware sale or what we're starting with the initial hardware sale we do have a sas model long term but initially we need to get the hardware out there begin gathering data and then we can turn on the recurring revenue okay so if i want to sign up for this thing what's the hardware going to cost me as a consumer the hardware's going to cost you 1.99 so you can buy it on amazon you can buy on our website but it's 199 right now online okay and um when did you start selling these when was your first sale our first sale was actually pilot programs to insurance companies probably two years ago and then we began selling on e-commerce platforms about december of last year so so pretty recently and when did you launch the business the business launch in 2015 uh took about two years of r d before you really had any product in the field how much cash did you have to have to sink into this thing before your first dollar of revenue it's a good question um i believe it was about two million before we got our first dollar revenue which is pretty low actually for an iot company yeah so software people were going to be listening to this going this guy sounds young like how to get so rich or where to get this money from a rich parent or trust fund or what's the story yeah far far from rich parents or a trust fund that'd be nice uh no we actually raised a lot from angel investors on the central coast of california so i mean we have a lot of investors involved uh the typical check size is like 25k so we've looped in you know a lot of angels initially um great investment base and now we've gotten some recent venture money but from small seed funds as well so how much was the first round total first round total was 250k second that's very small uh one million and third 750. so these were all convertible notes and basically multiple caps that kept growing uh and then recently we did three million on a priced equity rate on a price equity route so you have about five million in the company today total yeah yeah that's great okay so five million in um were you able to clean up the cap table from all those early convertible notes or do you have literally like a hundred people listed on your cap table we were able to clean it up i mean they're all on the cap table um but i was very happy to finally convert those notes over not be dealing with you know all the different interests the different dates so it's all clean now um but yes things get messy when you finally do that price round yeah yeah yeah okay good well so you made it through that now how did you i mean what was the story you told this last round of equity investment the three million and by the way when was that uh this closed about five months ago okay so what was the story you told those equity investors in terms of getting the valuation you wanted why you were having success you know why you're going to be a breakout a winner so i think what they were really excited about is seeing that what we were gathering the data we were gathering on water was useful across a variety of different channels so if you just look at this on amazon or look at it on our website you know it looks like this hardware this gadget but the end of the day there are all these different customers out there that want water data you know you interviewed a soft juan not too long ago with hippo insurance they are looking for data on water usage and leaks you know looking at like irrigation channels they want that information as well water utilities are looking for data too so there's the consumer aspect of it but really kind of flume being in the center of this water universe is what got these investors excited about what we're doing yeah and explain like how this installation works right so i'm looking at the hardware there's like a cylinder that looks like i can hold it pretty easily in my hand and then like a rectangle box thing that's about the you know three times the size of the round kind of fun how do these things actually fit into the water system yeah it looks pretty rudimentary right now it's our v1 product it's going to be more beautiful down the road here but it doesn't need to be pretty right no one sees it right right just has to work and that was our initial goal um so the real innovation here compared to anyone else in the market is that you don't need a plumber come out you do not need to cut pipes in order to install our product so nearly every home out in the market has a water meter on it that's how you get your water bill from the city and those water meters have little magnets inside of them that spin so that black box that you see is actually a sensor that goes on the side of the existing meter and monitors that movement through the meter you don't need a plumber come out you don't need to break any pipes you can install it in about 10 minutes and you have leak detection and water monitoring across your entire property both indoor and outdoor no one's been able to do that and that's kind of the main innovation with what we've developed patented patent pending right now okay so haven't had it if it's not issued and haven't had to defend it yet yep not yet but we're getting there it's a process yeah i can imagine okay so what are these little devices i mean what do they cost you to make and do you do them kind of domestically or internationally china somewhere else we start up domestically here in california of course their cost of goods were very high you know we weren't making much margin off that uh now we're going overseas i can't tell you exactly what our cost of goods are but i can say you know it's under a hundred dollars per unit what was it in california margin on the product um you're always battling with trying to drive that unit cost down and also make sure that the quality stays just as high we're still doing low volume here so as we kind of go up to a higher volume that price point goes down that cost of goods goes down significantly yeah eric just start and stop your video real quick because you froze on me and reset that but we'll keep chatting in the meantime so when you are still in california doing the manufacturing what was your what was your how i mean how expensive was it when we initially started out our cost of goods was hovering around 130 in california okay got it and you've been able to drive it now below 100 by moving overseas yep okay that's great so let me ask you a question right i mean why why not i mean if your software platform which is going to be higher margin more data more valuable over time is dependent on the hardware install wouldn't you be fighting like heck to subsidize these installs not trying to make a 70 80 90 100 margin on each of those hardware sales that's like pennies compared to what you're trying to build right right so there are some pretty cool ways we can do that um we're actually working with water utilities all over the country and they are actually subsidizing that cost so for example in san antonio right next to nearby where you are san antonio is paying us 150 in rebates per unit that we sell so for customers they only have to pay 50 bucks and we're able to still gather that 150 cost for the 150 revenue uh and that way for the consumer you know it's not too expensive and we can also begin to drive some sas revenue off of the portal side of the business which is a software platform that basically allows you to see this data um from a master or portal view and what do consumers pay for that this is actually not a consumer play so this is the utility play this is where the utilities are able to log in and see this information across a city and access that data from those customers homes and the customers are opting in to share that data...