Monday, September 17, 2018
Interview with Gabriel Halimi, Co-Founder Of Flo Technologies
Have you ever experienced a catastrophic plumbing failure in your home, or know someone who has? It's not uncommon--and it turns out, it's one of the most expensive things that can happen to you (and your insurer). In a bid to prevent the damage from those plumbing failures and also help save water, Los Angeles-based Flo Technologies (www.meetflo.com) has developed a water monitoring device and shutoff valve for your home, which is connected to your smartphone and its own app. The startup, led by co-founder and CEO Gabriel Halimi, is backed by Crosslink Capital, Anthemis Group, an affiliate of USAA, and such angels as Jamie Siminoff (of Ring fame) and Jason Nazar (who founded Docstoc). We caught up with Gabriel to learn more about the company.
Tell us what Flo does?
Gabe Halimi: Flo is a water monitoring and shutoff device for the home. We prevent water damage, which is the leading cause of preventable homeowners insurance claims every year. We also help prevent a lot of water waste in homes. Thirteen percent of water in homes are lost due to leaks, which equals trillion gallons of water. We're helping to prevent huge problems with our hardware and software solution. The system itself is one hardware device, which is installed on the main water supply line to a home. From there, we learn all about the home's water usage using machine learning algorithms, by collecting data every second of the day regarding water flow, pressure, and temperature, all three of the fluid mechanical elements of the potable water system. As we learn what's normal, we're able to notify homeowners of say, a leak as small as a drop of water a minute, water that's been running too long, or signs that a water burst may be looming because of something like high water pressure. If there is a problem, we notify the homeowner through their smartphone. We can also help set conservation goals, and if there's a catastrophic failure with a push of the button we can turn off water to the home. If there's something really dangerous, we can even shut off the water automatically. We have a support team that is on call, and available to help homeowners troubleshoot plumbing issues, and we can even deploy a plumber to help with that repair. It's like an alarm system, but for the home. It's also similar to what people have come to expect from something like a Nest for their thermostat, or Ring for their doorbell. There's never been a water control and monitoring product like ours which has been ubiquitous for the home, and I think we're well positioned to play that role for homeowners.
How did you start the company?
Gabe Halimi: The story actually starts with my dad. That's not typical for a venture backed company. My dad has been in the plumbing pace for over 30 years, and has invented a number of plumbing products. He's a mechanical engineer by trade, and also has served as an expert witness, helping to defend against subrogation claims from insurance companies for many large plumbing companies. He had been at the receiving end for the plumbing industry, when they received things like negligence or product reliability claims when plumbing parts failed, and homeowners insurance had to pay out claims. He would do the forensics on what went wrong. It's a sizeable issue, and it's the largest source of preventable homeowners claims. About 2 percent of homes across the US will see some kind of water damage, as a result of their home water system. My dad would assess those claims, and use forensics to determine what caused those plumbing failures to happen. He'd wear both an expert witness hat and an inventor's hat looking at the problem. A little over ten years ago, we had our own catastrophic plumbing failure. I was the one to come home first, and there was rain coming from the middle of our living room. It ended up one little connector on a toilet water supply line, a 25 cent part, had popped off, and the water ran for three days and flooded the house. We spent eight weeks living in a hotel while our home was repaired. After that experience, that caused my father to invent the solution that would help prevent this for all homeowners around the country. He set off on this journey ten years ago, and three and a half years ago, I saw what my dad was playing around with in the garage, and he gave me a demonstration of an early prototype of what has become Flo. I was convinced this was the wave of the future. Living in California, and specifically, Southern California, where we have experience severe drought conditions and continue to suffer from drought, I realized how important it was to prevent those leaks from happening. So, I quit my job and started three and a half years ago on this journey, and we're now well on our way.
Where are you now, and can people buy the product?
Gabe Halimi: Over the last two years, we had done lots of testing of or product, and have been piloting this with different insurance companies around the country. We also have launched directly to customers, and this became available for sale on our website back in January. Our two main distributions today are we sell direct to consumers, and we also sell through plumbing distribution, directly to plumbers. They then resell them to homeowners. We also have a deal with one of the largest leak detection companies in the country, American Leak Detection, which is exclusively selling our product to homeowners. They operate in 44 states. We're now setting up distribution for similar plumbing companies around the country. Insurance companies also have started promoting this to their homeowners, and homeowners with many insurance companies can receive a premium discounts for installing and maintaining our technology in their home. For many homeowners, it pays for itself.
Do you run into install difficulty with having something that needs to be part of your plumbing system, and how do you handle that?
Gabe Halimi: We have professional installation partners, mainly plumbers, because that is important for our business. We don't recommend that they be installed by a homeowner. We've partnered with many plumbers around the country. The installation takes about 45 minutes, and it's not a very complex installation for a plumber. Our devices is only six inches long, but water has to be shut off to the home, a pipe cut, and the device inserted inline The time and cost of installation is a small price to pay for the level of protection that the homeowner receives. With our new Flo Protect package, an optional subscription for $5 a month, we will guarantee homeowners that they will get no catastrophic damage. If they do, we will reimburse them their insurance deductible. We're very confident of our ability to prevent water damage in people's homes. The chances are, it's going to happen in everyone's home at least once in its life cycle. Although there is some complexity with installation, and it's not as simple as a DIY product, the return on investment a homeowner gets is many times over.
Plumbers are not exactly known for their adoption of high tech products. How has that been for you?
Gabe Halimi: That's a great question. At first, many plumbers are hesitant about our technology. They are fearful, in some ways, that this may detract from their business. There's nothing further from the truth. They soon realize this as soon as they install our technology. Plumbers can make money selling out technology, which we sell at wholesale for the plumbing industry. Once it's installed, it immediately identifies if there is a leak in a home. Even a drop of water a minute, anywhere in a homeowner's home. There's an opportunity for the plumber to help fix whatever leak that may be. Most homes have leaks. 13 percent of household water is lost in home infrastructure. Where this gets exciting for plumbers, is this also generates leads for them when there's a problem in the home's water system. We let homeowners know if there are things like pressure at a dangerous level, backflow issues, thing that are technical but a homeowner may not realize, but are important to conserve water and keep a home safe. We identify those vulnerabilities, and send leads to the plumbers who installed the technology—the plumber of record. Slowly, and I say slowly, I think the plumbing industry is understanding which this technology is the future of plumbing. It's how leads can be generated, and how plumbers can figure out there is work to be done in a home. I didn't phrase this term, but someone in the insurance company said we will be the Uber of plumbers. I think that comparison makes sense.
How are you funding the startup?
Gabe Halimi: We've done a couple of rounds of venture funding to date.We did a seed round, where we raised $3.5M. The largest check was from Crosslink Capital, a wonder fund and someone we're pleased to work with. That also included USAA, the insurance company. $1.5 of that was from a number of different technology angels, angels from the plumbing industry, angels from the real estate industry, and also Jamie Siminoff, our hometown hero, who sold his company to Amazon. He was an early investor in Flo, and one of my earliest advisors, as is Jason Nazar, who sold his company to Intuit years ago. A year and a half ago, we did a Series A, where Crosslink led again, with many of the same investors. We're now in process of raising another strategic round. I can't announce who invested yet, but it's another household name. To date, through those two rounds, we've raised a little over $11M dollars.
Finally, what are you working on now?
Gabe Halimi: Our goal is to get as much distribution of our product as possible. We want people to know it's a very important way to prevent lots of water damage. What is most exciting, is the amount of dat we're now collecting and how that ultimately makes your entire home safer. With our technology and the data we're collecting, we can get a pretty good idea of a user's habits. The homeowners own and control how their data can be used, but if they opt in, we are able to use their data to communicate with other connected devices in their home, and to help protect it. Water usage in the home really like the lifeblood of the home. There's a lot of similarities between blood pressure and water pressure. We can tell if people are home, based on their water usage. If someone is not home, we are able to help them set their alarm if they forgot. If they're home, we can even help them disarm the alarm. Some other integration is even more exciting. For example, if someone lives in an area with freezing conditions, if water freezes in a pipe, that water can expand and case the pipe to burst. We can detect that's happening, and tell your Nest thermostat to increase the temperature to keep your pipes from freezing. So, the next frontier for us are these integrations with smart home products, to help prevent water damage, and help you save water, and even make your entire home a safer place.
Thanks!