Friday, February 5, 2016
Rachio: Bringing Smart Watering To Your Lawn
The last few years here along the Front Range have been a tough one, with the entire region suffering from drought for the last five years. Despite what had been a hopeful wet spring in 2015, the Front Range dropped back to drought status in September. Although things are looking up now, that drought situation helped spawn the birth of Denver-based Rachio (www.rachio.com), a startup that is hoping to eliminate wasted water in irrigation not only in Colorado but across the country. The company recently rolled out an updated product for the upcoming season. We talked with CEO and co-founder Chris Klein about the company's product and plans.
For those who aren't familiar with your product, tell us a bit about what you do?
Chris Klein: We're a little over three years old. We started in November of 2012, with the mission of saving water. In 2012, here in Denver, we were in our third year of drought, and that was top of mind for me and my cofounder and many others in Denver. As we started to look at the space, we noticed that irrigation controllers were one of those things everyone can see. During the summer, we'd notice people watering their lawn during the day, and watering their lawn even when it was raining. Looking into this space, we realized that residential irrigation was the largest waster of water in the residential space. It accounts for 60 percent of all wasted water, nearly 1.6 trillion gallons a year. So we set out to build a better product. We did that, and it took 18 months to get it to market. In May of 2014, we launched our first generation at Home Depot. We've now been out in the market for 20 months now, and it's been a great ride. Customers love our product, and we're a category leader, and also the best seller on Amazon.com the whole time we've been out. We have a 4.7 star rating and above for the whole time, the highest rating in home automation.
What is the new product release about?
Chris Klein: We are getting ready to launch our second generation products. This generation builds on our highly rated first generation. It really improves things in three areas, all based on customer feedback. One is in industrial design. Because our controllers are often located outdoors, we have added a new, low profile controller, and made the enclosure water resistant so it can be installed anywhere. We've done things like making more room for wiring, since when people replace existing irrigation controllers, the old wires were often rated for things like 12 gauge wire. We've made the bay bigger for that customer wiring, and we've also added manual controls. Lots of customers had request that we allow them to turn a zone on and off from the hardware. From an internal perspective, we've improved our chip set, moved away from the “blinkup” process we used to use for wireless discovery, because there is newer technology now to allow for discovery of a device online. Finally, we've added a couple of things to the hardware, which allows us to expand it in the future and add more integration. We now offer up a controller with 16 zones at a lower price point, at $249 versus $299.
Who is buying your product—homeowners, or landscaping companies?
Chris Klein: It's a little of both, but mostly homeowners right now. 80 percent of our installed base it do-it-yourselfers, installed by our customers. Traditionally, 70 percent of irrigation controllers were installed by professionals, and obviously with a DIY product it makes it simpler for a homeowner to understand, to schedule things.
It looks like there is a mapping and data aspect to your product?
Chris Klein: There are a few things in that area. We use that to understand your zone attributes—what kind of vegetation, is there shade, are you on a slope, and soil types. Those are one piece of the sytsem that feeds into our algorithm. The other is evapotranspiration, which is how much water is leaving the soil, obviously how much precipitation there is, how much is added by mother nature. Irrigation is the last piece, which supplements natural precipitation to keep vegetation healthy. We spit out an algorithm that adjusts your schedule throughout the season. Obviously, in March or April, you're watering a lot less than in July, both on a frequency basis in terms of less days, but also less minutes. That's one smart component. Another is what we call cycle and soak. If you've ever seen someone irrigating and seeing it all running off to the sewer system, that's usually in a case with soil like clay, which can only absorb water for about five minutes at a time. So, if you water that for fifteen minutes, the last ten minutes are pure runoff. That's a huge waste of water, and it's not that great for your vegetation. What we do, is break things into a five minute cycle for clay, where we'll water for five minutes, water some other zone, and then come back and water for five minutes more, so the water in the first zone soaks things up and pulls it deeper down, and come back again until we're done. That's a really good thing. You're not wasting water to runoff, and it also helps grass become more drought resistant.
It seems like this can be quite a seasonal business—obviously, no one here is watering their lawn nowadays. How have you looked at that as a business?
Chris Klein: Obviously, that does change throughout the country. In Denver, our season is probably March through October. In other places, like Texas, Southern California, and Florida, and also Atlanta, the season is a lot longer, nine to 12 months. Obviously, in the North it's shorter, and that's something we watch.
How is the company funded and backed?
Chris Klein: We just closed our Series A in November, and it's something we're really excited about. We raised $7.1M, and that money will go towards growth, meeting existing demand for Generation 1 and Geneartion 2. To date, we've raised $10.5M for the company, and from our data, we're probably the most well funded company in our category. If you combine that category leadership with our partnerships and channels, that puts us in a good spot to define and grow this category.
Finally, what are your goals for the next year or so?
Chris Klein: The next few months are really about having a successful launch of our Generation 2 product. We had some solid growth through 2014, 2015, and in 2016 we really want to bring awareness to this category. I think we'll benefit from the growth in connected home and obviously the connected yard.