The Exchanges

Q 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, 9000 dollar margin on each of those hardware sales? That's like pennies compared to what you're trying to build.

A Right, right. So there's some pretty cool ways we can do that. We're actually working with water utilities all over the country, and they are actually subsidizing that cost. Um, so for example, in San Antonio, right next to, you know, nearby where you are, 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. Uh, and that way for the consumer, you know, it's not too expensive and we can also begin to drive some SaaS 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 portal view.

AI assessment note: “We're actually working with water utilities all over the country, and they are actually subsidizing”

Q Yep. Okay, good. And, um, how do you, I mean, for people that are buying this directly through Amazon, what's their incentive? Why are people, why do people Care about monitoring their water personally, unless they're just like a really good person and care about the environment.

A Yeah, you can't sell just based on being a really good person. We figured that out. Um, you know, most reviews we read, it's someone who, you know, came home to their vacation house, they opened their door and water started pouring out, or they got hit with a thousand dollar water bill because they had a toilet leak that was running that they didn't know about. Um, you know, it's one of those things where it's like, it's not a sexy space at all. Like leak detections, not sexy. Right. But it's a real problem that people experience Quite often, 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.

AI assessment note: “spending a 199 bucks to fix that problem is a pretty nominal cost.”

Q And the customer, sorry, is the utility person or the homeowner?

A There's two customers. So there's the utility, there's, and there's the homeowner. But right now I'm talking about the homeowner themselves, because that's really where most of our effort is focused. Um, so we have homeowners that are logging in about once every two days, checking in on their home, making sure they don't have any leaks. So the engagement is really high. And what that is important for is if you ever want to upsell something, right, if you want to encourage those customers to, hey, maybe switch over to a different insurance carrier because you can get a discount for having Flume installed. Um, or you can get a rebate from your utility. Uh, you know, you want to keep those customers engaged. So we're trying to ensure that we have this ongoing relationship with our customers.

AI assessment note: “There's two customers. So there's the utility, there's, and there's the homeowner.”

Q 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 gonna be a breakout winner?

A 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. Um, 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. Um, but at the end of the day, there are all these different customers out there that want water data. Um, you know, you interviewed a soft one not too long ago with hippo insurance. They are looking for, uh, data on water usage and leaks. Um, Um, you know, looking at like irrigation channels, they want that information as well. Water utilities are looking for data too. Um, 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.

AI assessment note: “flume being in the center of this water universe is what got these investors excited”

Q It doesn't need to be pretty, right? No one sees it.

A Right, right. It 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. Um, 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. Um, no one's been able to do that, and that's kind of the main innovation with what we developed.

AI assessment note: “Right, right. It just has to work. And that was our initial goal.”

Q Okay, got it. And now, do, do all of your 10,000 shipped units fall under one of these management companies? So you're doing, I mean, if it was full capacity, it'd be 10,000 dollars a month, a dollar per user per month across four customers.

A So we have a couple lines of business. We have the utility channel, where we're actually selling through those utilities, and they are basically advertising our product to customers, and customers are buying it Then we also have direct consumer sales on Amazon, and Amazon is becoming a large channel for us as well. Um, right now we're not getting that recurring fee from Amazon sales because that's just a direct consumer sale, and we're not necessarily working with a What it does is it also kind of opens up these doors to have conversations with those utilities and say, hey, you know, you have 500 customers in your region that have Flim devices. It's time we actually start talking.

AI assessment note: “right now we're not getting that recurring fee from Amazon sales”

Q Okay. Okay. Got it. A dollar a user a month. That's good. And then how does this mature? Like, how do you see this maturing over time? Right? So when does the software business become bigger than the hardware business?

A It's a really good question. Um, we see these integrations becoming more and more value as basically as we get, you know, more units out into the field. So we're not, what are you at right now, by the way, how many units in the field? We're approaching like 10,000 units. So still small, but beginning to, you know, a reasonable number of customers out there. Um, so we're not anticipating charging these utilities more on a monthly basis for that data, but we're anticipating turning on different channels. So So companies also want to know how much water is being used outdoor and they want to integrate that with their irrigation controllers. Um, insurance companies like Hippo, uh, want these units to be in customers home and potentially would be willing to share some of that cost savings. With us in order to get these units and customers homes. 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.

AI assessment note: “we're not anticipating charging these utilities more on a monthly basis... but turning on different channels”