Every Flush You Take

Silicon Valley is watching your water habits. That’s probably a good thing

The rain is battering away at a conference room window in downtown San Francisco as Peter Yolles, the founder of WaterSmart, tells me how his company is making a business out of convincing people to consume less water.

After three years of a historically unprecedented drought in California, I had come up with what I thought would be a great idea for a tech story. Silicon Valley innovations are supposed to be all about changing the world and improving people’s lives, right? But what, I wanted to know, was it doing about one of the world’s biggest looming problems: the challenge of supplying enough clean, fresh water for a thirsty, thirsty world?

All roads immediately led me to WaterSmart, a venture-backed startup that combines data analytics with behavioral science to persuade people to cut back on their water use. Scott Bryan, the director of Imagine H2O, a seed accelerator that focuses exclusively on companies operating in the world of water, told me that out of the dozens of new companies that had gone through Imagine H2O's program, WaterSmart was doing the best.

Historically, Bryan told me, venture capitalists have been reluctant to invest in water-related startups because the water business is an extremely capital-intensive industry that is both fragmented and heavily regulated. You don’t get big returns on investment on a Silicon Valley time frame by investing in infrastructure. But WaterSmart’s model, which focuses on changing human behavior, doesn’t touch any infrastructure.

“WaterSmart is a great story,” he says. “They have been able to demonstrate a five percent conservation savings with a piece of software. They’ve had real success with it. It is exciting.”

When you take a close look at the change-the-world rhetoric that floods out of Silicon Valley, it’s sometimes hard to see how that new chat app seamlessly integrating video and targeted advertisements is meaningfully improving our standard of living. What makes WaterSmart fascinating is how it applies the current state-of-the-art logistics of Silicon Valley — readily accessible venture capital, cheap cloud computing, and sophisticated data analytics — to tackle a social and environmental problem of the highest order.

WaterSmart’s solution is to suck gobs of usage data up into the cloud, crunch it and then target wasteful water consumers with specific recommendations on how they could do better. We worry, for plenty of very good reasons, about all the data Silicon Valley’s tech companies are collecting about every aspect of our lives. But if the trade-off is a more sustainable world, maybe this time it’s ok to go with the flow.

In the week before my interview with Yolles, more rain fell in San Francisco than in the entire year of 2013. Mindful of the downpour outside, practically my first question is whether WaterSmart’s success might actually be explained by the drought. The company started deploying its software almost exactly when the rains stopped. Isn’t it an easy sell to get people to conserve when the landscape is so parched? And won’t it be much harder for his company to keep getting traction when the rains return and the immediate pressure slackens?

Yolles is more than ready for my questions, because answering them goes right to the heart of how WaterSmart works. Contrary to what one might expect, he says, it’s very difficult to get people to cut back on their water consumption by appealing to their concern for their environment. Perhaps even more surprisingly, it turns out that appealing to thrift — savings on your utility bills — also doesn’t move the water meter needle.

So what does work? Shame!

“Research shows,” says Yolles, “that only one out of ten people are motivated to save money and only one out of ten are motivated to save the environment. But eight out of ten will do so to keep up with the Joneses.”

The observation, drawn from research in the field of social psychology, doesn’t provide the most uplifting insight into human nature. The most effective way to get you to cut back on your long showers and half-empty dishwasher loads is to lay a guilt trip on you by proving just how profligately you are wasting water in comparison to your neighbors? Yuck. But it seems to be true. WaterSmart’s data, culled from 35 municipal utility customers and over a million individual water consumers, (and confirmed by independent evaluations) indicates that a year after deployment of its “behavioral water efficiency solution,” the utilities recorded consistent decreases in water consumption of five percent or greater. For budget-strapped utilities in the parched West, the savings make for a convincing pitch. Last October, WaterSmart announced ten new utilities had signed on as clients.

WaterSmart is capitalizing on a classic big data play. The water business is incredibly fragmented — California alone has more than 500 municipal water utilities. A single utility, explains Yolles, doesn’t have access to enough data to construct the the kind of detailed user profiles that make accurate — and compelling — comparisons possible.

A five percent reduction may not sound like much, but the implications of a successful rollout of WaterSmart’s software across the tens of thousands of municipal water utilities that serve customers across the United States are huge. Globally, the demand for clean (and cheap) water keeps rising, propelled by population and economic growth. But supply is limited by fundamental resource constraints and the huge capital costs involved in building, and increasingly, maintaining water infrastructure. Every drop counts.