How A Utility Dared To Work With A Startup

A large utility and tech startup couldn’t be more different, to the point of being opposites, yet American Water dared not only to work with Smart Earth Technologies (“SET”), but eventually entrust it with collecting and aggregating meter data used to collect its $3 billion in revenues.

“It was our first major engagement with a startup, and it was big,” said Paul Gagliardo, Innovation Manager at American Water, which operates as a regulated utility in 16 states. “For a good while, the first reactions I got internally were ‘that’s never been done before.”

“I started telling people to just assume that what I wanted to discuss with them was something we’d not done before, because that was my job.”

What Gagliardo was socializing was a response to a business need, not an innovation project, per se. He’d been seated next to the supply chain group when he started work as the innovation manager in 2009, and overheard them talking about spending $50 million per year on water meters, purchased from mostly a single vendor. The product used proprietary software, so there was little opportunity to look for competitive bids from the four or so other manufacturers (each of which had between 12-20% of the market).

“I thought if we had a universal translator, we could read everyone’s meters,” he remembered. “But none of the meter makers were interested.”

Read the entire essay at Innovation Communicator