Dec 10, 2020 · 22m · top-founders
FlumeWater Sells 10k Units at $200 With SaaS Upsell
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gold bands on the timeline = statements, start to end. Hover to read, click to jump. CC turns on captions
In this interview with Nathan Latka, Flume Water founder Eric Adler details how his smart water monitoring company scaled hardware sales to 10,000 units while expanding into high-margin recurring SaaS data partnerships with municipal utilities and insurance carriers. He outlines Flume's unit economics, capital-efficient fundraising, controlled burn rate, and long-term path to profitability.
How this conversation actually went
Every chapter scored 0–10 on four independent dynamics. Hover any point for the reasoning behind the score. Nathan holds 37.6% of the talking time here. How this is scored →
Nathan as informed peer 6.1 Guest teaching 4.1 Guest disagreement 1.3 Nathan pushing back 3.5
speaking balance: gold is Nathan, purple is the guest (3 minute bins)
Sharpest disagreement ▶ 14:36 Adler rejects Latka's low-runway assumption
Adler directly corrects Latka's runway calculation by stating the cited burn was gross and that net burn leaves them with plenty of cash runway.
Hardest push from Nathan ▶ 7:57 Latka challenges hardware margin strategyLatka rejects the premise of collecting margins on hardware sales when the larger value lies in subsidizing installs to capture recurring data and software fees.
Biggest teaching moment ▶ 6:07 Adler educates on magnetic meter monitoringAdler explains the engineering innovation behind reading spinning meter magnets without pipe cutting, educating Latka on how Flume avoids plumbing costs.
Nathan holds their own ▶ 14:40 Latka recalculates runway on the flyUpon learning the gross burn figure, Latka instantly recalculates net burn to around $100k and adjusts the runway calculation from 12 to 30 months without missing a beat.
the scores for every segment, with the reasoning behind each
| Chapter | Topic | Nathan as informed peer | Guest teaching | Guest disagreement | Nathan pushing back | Why |
|---|---|---|---|---|---|---|
| Introducing Eric Adler and Flume Water's Origins | 6 | 3 | 1 | 3 | Latka explores the founder's background, fundraising history, and cap table evolution. He shows financial literacy regarding convertible note cleanup during priced rounds. | |
| The Data-Driven Investor Pitch and Value Proposition | 5 | 5 | 1 | 2 | Adler educates Latka on the technical installation advantage of Flume, explaining how magnetic sensors read existing water meters without pipe cutting. | |
| Manufacturing Optimization and Unit Costs | 6 | 6 | 2 | 5 | Latka challenges Adler on taking hardware margins instead of aggressively subsidizing hardware to drive SaaS adoption. Adler counters by explaining utility rebate programs. | |
| Scaling Units and Cross-Industry SaaS Potential | 7 | 4 | 1 | 4 | Latka presses into the exact unit distribution and converts channel breakdowns into monthly recurring software revenue estimates, which Adler validates. | |
| Customer Pain Points and Vacation Rental Opportunities | 7 | 4 | 2 | 5 | Latka challenges Adler on why he only raised 10-12 months of runway, prompting Adler to clarify the difference between gross and net burn. | |
| User Retention and App Engagement Metrics | 6 | 4 | 2 | 4 | Latka analyzes team composition and pushes on sales quota structures, while Adler explains why traditional hard-sell quotas alienate municipal utility buyers. | |
| SaaS Valuation Positioning and Annual Pro Subscriptions | 7 | 5 | 1 | 3 | Latka calculates annual ARR and customer acquisition cost figures instantly while Adler shares pro-tier subscription pilot results and market growth tailwinds. | |
| Famous Five Quick-Fire Questions | 5 | 2 | 0 | 2 | Rapid-fire Famous Five round where Latka keeps pace brisk, followed by an accurate concluding synthesis of Flume's unit economics and burn figures. |
Statements from this episode (22)
Adler: Flume Water hardware retails for $199 on Amazon and DTC
“The hardware is going to cost you one nine nine. So you can buy it on Amazon. You can buy it on our website, but it's 109 nine dollars right now online.”
Adler: Flume spent $2M in capital before generating its first revenue
“Believe it was about two million before we got our first dollar revenue, which is pretty low actually for an IOT company.”
Adler: Flume raised three convertible note rounds before $3M priced round
“First round total was 250 K second. It's a very small 1,000,003rd, 750. So these were all convertible notes at basically multiple caps that kept growing. And then recently we did three million on a priced equity round.”
Adler: Hippo Insurance actively seeks residential water usage and leak data
“They are looking for data on water usage and leaks.”
Adler: Flume Installs in 10 Minutes Without Plumbers or Pipe Cutting
“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 …”
Adler: Flume hardware cost of goods is under $100 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.”
Adler: Flume Water's Initial California Unit COGS Was Around $130
“When we initially started out, our cost of goods was hovering around a 130 dollars in California.”
Adler: San Antonio utility pays Flume $150 rebate per unit
“San Antonio is paying us a 150 dollars 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 dollar cost for the 150 dollar revenue.”
Adler: Utilities pay Flume roughly $1 per user monthly for SaaS portal
“It's small, you know, we're talking like a dollar per user per month.”
Adler: Flume avoids consumer subscription fees, monetizing data via third parties
“So we'd like to not, you know, burden the consumer market with another subscription fee that you have to pay for and find ways to get that revenue from kind of third parties that we're working with.”
Adler: About 60% of Flume's 10,000 units sold through Amazon
“Probably about 60% of them have come from Amazon.”
Adler: Flume's SaaS revenue is in the low thousands per month
“It's small. Yeah. If you're in a, it's in that ballpark, low, low thousands.”
Adler: About 50% of US Homes Have Experienced Water Damage
“About 50% of homes throughout the country have had water damage, so once someone has experienced that, they never want it to happen again, and spending a 199 bucks to fix that problem is a pretty nominal cost.”
Adler: Flume gross monthly burn is a few hundred thousand dollars
“You know, we're burning a few hundred grand per month right now. You know, we're not at profitability yet by any means.”
Adler: Flume consumers check the water monitoring app every two days
“On average right now, we have customers that are checking in on the app about once every two days.”
Adler: Flume Water Sells About 1,000 Units Per Month
“We're doing in the ballpark about a thousand units per month.”
Adler: Flume Water Grew Unit Sales 7x Year-Over-Year
“We were doing like a hundred units every other month. So we were doing basically nothing. You know, it's in the ballpark seven X growth from last year.”
Adler: Flume Water lost only one person in four years
“We've only lost one person over the past four years of business.”
Adler: About 5% of Flume Customers Pay an Annual Recurring Fee
“We have about five percent of our customers right now that actually are paying a recurring annual fee.”