Jane: [00:00:02] Hello, I'm Jane Goodland and this is the LSEG Sustainable Growth Podcast, where we talk to leading experts on a wide range of issues that touch both the worlds of sustainability and finance. This week I had the pleasure of talking to Craig Foster, who's the CEO of Water Technology company, Ondo. Launched and listed on the London Stock Exchange in 2022, it was also awarded the Green Economy mark in recognition of the environmental benefits it delivers. Ondo’s technology is literally saving millions of litres of wasted water. So, let's hear more from Craig about Ondo's journey so far.
Jane: [00:00:40] Hello Craig, and welcome to the LSEG Sustainable Growth Podcast. Thank you so much for joining us today.
Craig: [00:00:45] Thanks, Jane. Yeah, thanks for the invite. It's nice to meet you.
Jane: [00:00:48] Great. So, we've got loads to talk about and I've got some great questions, now Ondo launched and listed in, just last year, 2022 and you're a CEO for the first time so I don't get to ask this question very much, but I'm really curious, what's it like? What's the last couple of years been like? I mean, listing a business is not something that lots and lots of people do. So, give us a little bit of an insight. What's it been like over the last couple of years for you?
Craig: [00:01:14] Well, it's been a roller coaster is the honest answer, Jane. So, it's been good fun, but it's been quite a journey. We came on the market in March of 2022 we were a reverse takeover transaction. So, we arrived on the stock market as a small company with a new name, Ondo Insurer Tech. So obviously we had no investor profile. And the timing wasn't particularly great in hindsight. So, the market hit a few difficulties.
Jane: [00:01:45] Yeah, it's difficult to plan these things, right?
Craig: [00:01:47] And I think small caps got badly hit and tech stocks got badly hit. So, we were in the kind of wrong place at the wrong time. If you look, backwards. So, it was tricky at the beginning because we had that no investor profile, there was very little liquidity on our stock at all for like the first nine months. So, we were kind of getting on with our plan and, putting out announcements and just no one was interested for a long while. But people who, much wiser than me and more experienced kept saying, don't worry about it, just carry on doing what you're doing. When the market comes back, people will catch up with the story. And at the end of the day, our confidence came from we had a simple story and a simple product that solves a big problem. So, at some point, people would start to catch on to it. And I'm pleased to say it was around about April it started to really change, of this year, and the stock's up 300% year to date at the moment. So, like I say, it's been a roller coaster.
Jane: [00:02:45] Yeah, I did see your share price chart and it looked pretty interesting, right? I mean, just from a personal perspective, Craig, is it daunting being at the helm of effectively a public company where, like you say, for the first nine months not much interest but then all eyes on, right? So, from a personal perspective, what's it like?
Craig: [00:03:04] It’s really interesting. I think I've handled it okay in terms of the amount of public interest suddenly in what we're doing. That feels better to me than being totally ignored because felt like, you know, I wish somebody cared and no one was interested at the beginning. So, the fact that there's been such a sea change and now we've got some really, really engaged retail investors in the stock, following everything that we're doing. And you know, I did like a telegram Q&A just a few weeks ago. And it's amazing how much some of these guys know they're so well briefed on the business, but I find that really encouraging. And it's been really great for us. And they often have really good ideas and really good advice. Obviously, it does create a pressure as well. Especially I feel like an enormous kind of responsibility that people are investing their money behind our story. But it's also really nice meeting people who bought the share when it was £0.06 and it's, and it's now £0.30 I really like bumping into those people at the moment.
Jane: [00:04:04] I'm not surprised. They're probably very happy indeed. So, why don't we talk a little bit about a bit more about the company then? And so, the technology is called LeakBot, which is a kind of like the name anyway, just because it sounds fun, but tell me how the idea was created in the first place. So, what was the original motivation for the technology? And I guess there's an extra question, when did you realize that there was kind of a green growth angle to it as well?
Craig: [00:04:35] I mean, just to explain what we do today. The aim of the company is to become a world leader in claim prevention technology for home insurers. And like you say, we've got this proprietary system called LeakBot. And what that basically does is reliably, prevents water leaks in houses that produce very expensive home insurance claims. So, it's basically a small sensor that we invented. It detects leaks in a house. We deploy plumbers who then go and fix the leaks, and that basically stops insurance claims. But this actually all started out, I set up an innovation lab for a company called Homeserve who were previously listed on the stock exchange until recently, they were bought out by a Canadian company recently and taken private. But there are FTSE 250 company, and their heritage was in fixing things in the home, plumbers, heating engineers, that kind of thing. And I set up an innovation lab for them, really focused on the Internet of Things. One of the side projects we had is we were looking at is there a smart way with an Internet of Things kind of sensor that you could detect leaks in homes? And we were looking really for products to partner with. And what we found is the products just didn't work very well, existing products, they were either really expensive and you had to cut a pipe and install something in line, which was just prohibitively expensive, or they were like point sensors where if an escape of water kind of fell on them, they could sound an alarm. So, you'd need loads of them all over the house. So, we set about a project to think, Is there a non-invasive way that you could just clip something to a pipe near the stop tap and it could detect a leak anywhere in the house? And we actually stumbled across a new way of doing it, and we filed patents on it. And originally, we were thinking, oh, this is a good product to introduce into Homeserve, into the parent company. But over time, we just realized, wait a minute, this is a much bigger idea than we initially thought. One is we realized this is a huge cause of home insurance claims all around the world. And then what we found out later is actually this solves a massive environmental problem as well, because we realized we were fixing loads of leaks and consequently saving loads of water.
Jane: [00:06:39] Do you have a sense of how big a problem this is in terms of sort of like volume of claims, for example? Is it in in the top five number of claims? Is this a really big issue for both homeowners and insurers?
Craig: [00:06:53] Yeah, so if you think take the claims problem, that you're referring to Jane, so it's about a third of all the claims that are paid out on home insurance and that's pretty consistent around the world. So, it's always the number one or number two claim on home insurance.
Jane: [00:07:08] Right.
Craig: [00:07:09] So to put that in context, if you take in the United States, it's about $16 billion worth of claims every year are just putting houses back to how they were before because our pipes leaked. In the UK it's depending on the year it hovers around between £600-£800 million pounds worth of claims every year. So, if you think of your annual household premium, about a third of that is being spent on, tearing out, insulation and tearing out mouldy floorboards that go into landfill just to put the house back how it was before.
Jane: [00:07:44] Yeah. So big issue and a loss of a lot of water, which we know is a valuable resource that we need to look after. So, without confusing us, my small brain, but tell me a teeny tiny bit about, what’s the actual technology, because this, this sounds like a bit of a innovation a bit of a landmark, really.
Craig: [00:08:04] It’s a relatively, as all the best ideas are. it's a relatively simple idea. So, what the basically the sensor does is there's a temperature thermistor that sits against the pipe. So, you just clip this to the pipe. And I know this is an audio podcast, but.
Jane: [00:08:18] This is like a little box. It looks like the size of a I don't know, it's a few matchboxes stuck together maybe.
Craig: [00:08:25] Yeah, basically. Yeah. It's a small box and you clip that to the pipe near where the water enters the property, and the temperature thermistor is basically measuring the temperature of the incoming water. There's a second temperature thermistor in the box that's measuring the ambient temperature of the air where the unit's located. So, the simple idea basically is every time you flush the loo, you fill up the kettle, the temperature of the pipe is chilling to the temperature of the incoming water from underground. Now, when you stop using water for a while, you go to bed at night, or you go out for a couple of hours, the water is stood still in the pipe. And so, the laws of physics say that will warm back up to the equilibrium point, like everything will go back to the same temperature. So, the simple thing that we figured out is that if there's a leak in the property, there's a permanent trickle of water through the pipe and that creates a permanent offset in the two temperatures of 0.2 and 0.3 of a degree. So, the algorithm basically picks out that and you can get a very clear signature of there's something permanently drawing water through that pipe. And there's very little things in a house that should be permanently drawing water through a pipe. If something's doing that, it’s always a problem to solve. So that's basically how it works. And the cool thing is it's the only known non-invasive way of detecting a leak without cutting a pipe. And we own the patents on that all around the world.
Jane: [00:09:49] Thank you for simplifying that. It's still quite complicated unless you're of a physics lover! But nevertheless, does it work across the world? As in, do we all get water into our homes the same way? This is a go anywhere technology kind of thing.
Craig: [00:10:03] It works specifically in houses. So, if you've got your own water supply that runs underground comes into the property, then this will work. So, it doesn't work in like a high rise apartment building where there's one big main supply and lots of different apartments. We're actually doing some testing with the largest insurer in Australia at the moment out in Australia, because what we found there is the difference there is the pipe comes out of the ground, it never freezes, it comes out of the ground outside. So, we're basically running testing in Australia with them at the moment on creating a more of a weatherproof version. But otherwise, it's fairly consistent around the world. I mean, one thing that we've learned is there are idiosyncrasies in plumbing, in each different country. So, when we launch into a new country, we have to take our time to make sure we do understand any local variations in plumbing.
Jane: [00:10:52] So in terms of part of the story, which is about the green growth theme, as you know on the podcast, we think about things which are overlapping sustainability and finance. And that's why I think a company like Ondo is really interesting because even though it might have started as effectively a solution to an insurance problem, fundamentally it's also speaking to an environmental problem. And that's of our water resources which we know are scarce and valuable. So, at what point in this journey did this sort of the light bulb go off and you go, oh, actually, this is more than perhaps what I thought it was in the first place in terms of a sort of a neat insurance kind of claim management thing and actually more of a to do with the green story.
Craig: [00:11:37] I think that's been part of our story, Jane. It's been like lots of light bulbs. So, we kind of invented the thing first and then the first light bulb was, oh, this solves this huge problem for insurance companies. And then when we've been doing that for a while, the more we understood the model and we understood, you know, exactly kind of what the funnel looked like of how we deploy it and everything. One thing that I found out often had to explain away to insurers is they'd say, well, I have this many claims and you're doing this many repairs and I'm paying for them as the insurance company. But what are you actually fixing when you're in the home? And what we found is the most common thing that we were fixing was a leaking overflow on a toilet. You know, when you just you see the water running down the back of a loo.
Jane: [00:12:20] Yeah.
Craig: [00:12:21] Now, those leaks aren't actually causing any damage to the property, so insurers don't actually really care very much about them, but we don't know what it is we're going to fix until the plumber is in the home. So, I kept having to explain away, how many of these leaky loos that we're fixing. But then what we realized is actually in terms of water being saved, that fixing that leak saves loads more water than, any of the small things that can cause the home insurance claims. And over time we've just learned more and more of the significance of that, of how much water we save as a consequence of what we're doing. I mean, one of the things was when we were approached by originally the listed entity was called Spinnaker Acquisitions. So, we came on the market, like I say, through a reverse takeover transaction, it was a cash shell listed on the stock market. And they were looking for a company that had the potential to gain the stock exchange's Green Economy Mark, and it was specifically due to a categorization around water efficiency. So basically, quite easily we were able to prove through the statistics of the water efficiency savings and qualify for that Green Economy Mark and over time we've just come to understand that problem more and more and understand how we fit into it. I mean, the focus on driving water efficiency is becoming more and more important all around the world. And I think it's lost often in Britain because it rains so much, quite simply, we don't quite realize. But the problem is it's fairly universal around the world. Populations are growing, and then you overlay climate change on top. And the fact that the actual water infrastructure hasn't changed to keep up and that adds up to a problem. And it's definitely the same in the UK. So, per capita consumption of water has increased, and the population has grown. So, in the UK we're using double the amount of water now compared to the 1960s. So, to put that into context, that’s 5bn litres of water a day, so enough to fill 2000 Olympic swimming pools of extra water we're using. But the infrastructure hasn't changed to keep up.
Jane: [00:14:31] And that's in a country that basically we're a temperate country and we have a reasonable amount of rainfall. But obviously when you look at more water stressed countries and the problem is much, much worse, right?
Craig: [00:14:44] Yeah. Well, so people involved in water infrastructure around the world are starting to talk about this concept of day zero. And that's when basically water demand outstrips the supply in any given location, and you hit a crisis. And there’s certain parts of the world have come very, very close to this already. Even a few years ago, I think Cape Town in South Africa were days away from day zero where literally the water stops flowing in your home and there's rationing and from a standpipe in the street. But in the UK water wise, the water efficiency NGO, they predict that within 25 years in the UK we'll have a water deficit of 4bn litres of water per day if we don't do anything differently as a result of climate change and population growth. So, this is not a faraway problem that's not going to affect us in the UK, although most people will probably surprised to find that out.
Jane: [00:15:37] Yeah, and I think actually, I mean, one of the things that I always find fascinating is the interconnectedness of all of these issues, right? In terms of if you're thinking about growth in population, therefore that has an increased demand on food and agriculture, that in itself takes huge amounts more water. And then that's obviously linked in with climate change as well. So, I mean, I was quite interested to see that we've got water efficiency targets in the UK alone from Ofwat and, and these are very connected with our, achievement of a net zero from a climate perspective as well. So, all of these things are interrelated, and it just goes to show that we can't pursue individual environmental issues in isolation. It's really important to think about the wider impacts. And that's why I think that the technology that you guys have brought to market is so fascinating because actually what started as, something actually could end up creating huge, huge benefits in terms of water efficiency and not wasting the resource that we have, literally saving millions and millions of litres of water.
Craig: [00:16:38] Yeah. it's a really interesting point, Jane, just to build on what you're saying. I mean, I hadn't joined some of those dots even though, we were kind of working in this space. But it was a surprise to me that 5 to 6% of greenhouse gas emissions in the UK are directly derived from our use of water. But it's getting people to care about these kinds of things is the tricky thing because until you process this like say people are not quite tuned into water something if you're not on a meter it feels like it's kind of free. Because it rains a lot, you don't particularly think it's a scarce, it feels like it's an endlessly renewable resource, which it kind of is in one way.
Jane: [00:17:14] The point about the water meter is an interesting one. Because often actually we've seen the cost of living crisis and in particular energy this year, actually really starting to become much more of a focus for people because of obviously the impact on their pocket of higher energy prices. It's not beyond the realms of possibility that something similar could happen to water if it becomes far more stressed. And actually, the real price of water is then placed on every single drop that we use. So, it's definitely an interesting one to think about where the direction of travel could be. And it certainly makes it so important about why we need to be efficient. I'm keen to explore the Green Economy Mark, like you mentioned earlier, that Ondo was awarded, and this is a effectively a designation by the London Stock Exchange, which recognizes companies that are deriving more than half of their revenue from activities, products and services which deliver environmental benefits. And Ondo was awarded the green economy mark. So, I want to know more, in terms of has it helped you at all, what's it done for you in terms of what's the what's the benefit to an issuer such as yourselves?
Craig: [00:18:19] Yeah, we've definitely seen a number of benefits, Jane. I mean, one thing is when we came on the market, a year and a half ago, 100% of our strategy was focused on working with insurers. So, we were basically working with insurers to prevent claims, reduce costs. And we had this happy environmental benefit as a consequence of what we were doing. But the Green Economy Mark going through the rigor of that process, to hit the criteria is a kind of shorthand for primarily aimed at investors, but actually also at all different stakeholders as to the environmental benefits of what we're doing. So, one of the direct consequences from that is we were approached for the first time by a water company in the UK. Portsmouth Water said to us, Look, I know you base your business is working with insurers, but can we try and use your product specifically to drive water efficiency? So, we did a pilot with Portsmouth, and we showed through that pilot that we could reduce leaks by 60%. And it's really all about finding those leaky loos that I mentioned that are wasting hundreds and hundreds of litres per day. Since then, we presented those results to the whole of the water industry on a within a panel discussion, joined by Ofwat as the regulator as well. We use that Green Economy Mark on every single presentation, every single bit of marketing collateral. And I think the credibility that that gives us in terms of the environmental credentials of what we're doing is really invaluable. So, it's certainly helped us from a commercial point of view and it's broadened our strategy, funnily enough, as a result.
Jane: [00:19:56] I think it's quite interesting actually. I'm imagining you in that conversation and talking to other potential commercial partners. And actually, you know, we hear a lot about greenwashing, right, in terms of companies wanting to convey their environmental or sustainability credentials. But I can really see how the green economy mark actually is almost an antidote to that, to sort of say, well, actually it's all about our revenues, it's our revenues that are doing the talking in terms of connected into the environmental themes. So that sounds useful. I see big things coming, your way. There are so many opportunities. Let's talk about what's next for Ondo in terms of you're already in the UK. You are getting well established in the UK and into Europe, but I understand you're sort of breaking America as well, which, if you were a pop star, this is a kind of like a big moment for you, right? Tell me about that.
Craig: [00:20:46] Yeah. I mean the opportunity in the US is really exciting. So yeah, you're right. Jane, we've started in the UK, we've got a business in Scandinavia as well. But I think it sounds almost glib to say, oh, the US is a big opportunity because in any market, if you're sitting in the UK it looks like a much bigger market. But there's a couple of like structural reasons why it's such a good opportunity for us, it's not just the fact that there's so many more homes and so many more customers with home insurance over there, but the actual water damage claims are more of a problem, so they cost more in the US. So just commercially on a per household basis, it's a much bigger problem for insurers. And what we find with the US insurers is they're looking for a solution to this. They've tried the other solutions that I mentioned, the point sensors or the versions where you need to cut the pipe to install something. And they've just found that they're just not commercially viable, they don't work. So, we've done our first couple of pilots over there. We signed a first couple of deals we launched with a carrier in the Northwest, Pacific Northwest. We've just literally just launched into Washington State. We signed another deal with an insurer called Pure who are kind of high net worth insurer across the US. We're launching with them. Just the opportunity over there is absolutely massive. So, I think we're really just seeing how far could we take this? Like I think if we managed to sign a top ten US carrier, then all bets are off really, because the potential for the business over there is just absolutely huge. But the good thing is the plumbing is very similar. The leaks that are causing the claims are just the same and the model just works the same, where basically carriers offer our solution for free. If we detect a leak, they also offer the repair for free. We send in our guys to find and fix the leaks. And customers just love that because it makes an intangible insurance product something very tangible with a nice bit of technology and an app on your phone and then a bit of old fashioned customer service when someone comes to the home and fixes something and they're really polite and show you what they've done and it's really quite impressive, people are not expecting that and they really expect that there's a catch and they're going to have to pay for something. So, they're really surprised when it's actually free.
Jane: [00:22:58] Yeah.
Craig: [00:22:59] And that seems to equally resonate over in the US. So, I think the opportunity there for us is, you know, really exciting.
Jane: [00:23:05] Yeah. And there's many, many different regions that I'm sure that the technology will work as well. So, I think it's going to be really interesting seeing the growth of Ondo. I was thinking it's almost like you're a bit of an accidental environmentalist, right? You never started this to address one of the biggest environmental problems that we have. But it turns out you are Craig. So well done you. Look, we're running out of time, but I’m keen to get some final thoughts or reflections from you. Really about what's the journey, what are you, what are you thinking now? How are you feeling?
Craig: [00:23:36] Well, I mean, I feel really lucky to be in the spot that we're in right now. I think, like you say, Jane, there's been a lot of luck involved. I mean, there's been a lot of hard yards and it hasn't all been plain sailing to get to this point. But I think, you know, there's a lot of luck involved of just finding the right opportunities. But I feel like we're just in a really great spot right now. We're actually been able to make a really material difference to an important problem. And it's really great that recently UK investors have got so much behind the story. And I think ultimately that is because it's a simple product, it's a defensible and patented bit of IP that just solves this important global problem. And I for one, I'm really proud of the fact that this is something that was invented in the UK. We actually manufacture the hardware in the UK as well and we're listed in London, and I know that really resonates with our investors. I think they love the idea that this could be a real UK success story of a green tech company. So, I feel very excited about the opportunity to lead that business over the next few years as we scale and grow.
Jane: [00:24:37] Great story Craig, thank you so much for your time. I'm sure that probably in a few years’ time you're going to be far too important to come and speak to us. But, you know, maybe you could spare us half an hour in the future and tell us how it's gone for you. So, thank you very much indeed. And have a great day.
Craig: [00:24:52] Thanks for inviting me on.
Jane: [00:24:56] So that's it for this week's episode of the LSEG Sustainable Growth Podcast, which I hope you found as fascinating as I did. Thanks for listening. And if you're not already following us, then please do. And don't forget to rate us on Spotify, Apple Podcasts or any other platform. If you've got questions, comments, or someone you'd like us to talk to, then do get in touch by email at fmt@lseg.com. So that's all from me, but I hope you'll join us again for another episode very soon.
