By Amanda Little GCC
Amir Peleg hunches his broad, 6-foot-3-inch frame into a tunnel
leading to one of several reservoirs that supply water to Jerusalem.
Condensation collects on the ceiling, inches overhead, like thousands of tiny
stalactites. Peleg, an entrepreneur whose self-given job title is “chief
plumbing officer”,
Gihon was the ancient, intermittent spring that made human
settlement possible in Jerusalem circa 700 BC. Today, fresh water sources in
Israel and the surrounding region are more precious than they were in the
Bronze Age. About 1 million residents continually draw water from this
reservoir, which is filled by pipelines snaking from the Sea of Galilee 145
kilometres north. Located at the edge of Jerusalem, the reservoir is held in a
massive underground vault patrolled by armed guards to keep insurgents from
poisoning the supply. Thick cement walls surround a floodlit pool of water,
ghostly and luminous, 40 feet deep and wider and longer than two football
fields.
Until TaKaDu came along, the water-utility world was almost deaf and blind
Like most of its neighbours, Israel is a desert nation, and during
the past seven years it’s struggled through a drought with record-low
rainfall. In response, Peleg and others have come up with an array of
innovations, from microscopic sewage scrubbers to supersize desalination
plants to smart water networks. Israel now has higher agricultural yields than
it’s had in non-drought years. It even has a water surplus, a portion of
which (about 150 million cubic metres per year) it pumps to Jordan and the Palestinian
Authority.
“I don’t think it’s overkill to say that Israeli entrepreneurs are
disrupting and reinventing how the world creates and conserves water,” says
Peleg, 48. He’s become one of the leaders of a water-tech movement that began
in the 1950s, when Israel’s first prime minister, David Ben-Gurion, implored
scientists and engineers to “make the desert bloom”.
In 2008, Peleg’s startup, TaKaDu, began designing software that
uses mathematical algorithms to detect and prevent leaks in water pipelines. Peleg
has silver, buzz-cut hair, arching black eyebrows, and a jaw like an
anvil—George Clooney’s indomitable Danny Ocean meets the affable Schneider from
One Day at a Time. He’s part swaggering CEO and part scrappy superintendent.
Detecting leaks may seem like a small concern, but it matters,
especially in environments where water is scarce and expensive. Of Israel’s
total water demand (2.2 billion cubic metres a year), less than one-tenth is
supplied by freshwater sources such as the Sea of Galilee. The rest comes from
filtered gray water—Israel recycles more than 85 per cent of its wastewater—and
from desalination, an expensive process that transforms saltwater into drinking
water. “Among all conservation technologies in development, the most valuable detect
leakage in networks,” says Avshalom Felber, chief executive officer of IDE
Technologies, Israel’s biggest desalination company. On average, utilities
worldwide lose more than 30 per cent of the water they distribute in their
networks. By comparison, Jerusalem’s utility—Hagihon, Peleg’s first customer in
2009—wastes less than 10 per cent of its supply, thanks in large part to
TaKaDu.
Over the past five years, venture capital firms and companies
including 3M and ABB have invested more than $20 million in TaKaDu, and its
software has been adopted by 14 other utilities in cities from Campo Grande,
Brazil, to Bilbao, Spain. Last month, Peleg signed with Australia’s biggest
utility, Sydney Water. Collectively, these utilities manage about 64,373 km of
water pipelines. Peleg won’t disclose TaKaDu’s revenue but says it’s grown
more than 50 per cent annually over the past two years.
TaKaDu’s software is designed, as Peleg describes it, “to slice
and dice and analyse raw data measured by smart sensors in the water network”.
These sensors monitor the flow rates, pressure, and quality of the water and
identify bugs in the meters, valves, and other system equipment. From this
data, the software can analyse when and where water is escaping.
“Until TaKaDu came along, the water-utility world was almost deaf
and blind,” says Zohar Yinon, CEO of Hagihon. “Our network is not transparent
without this software. It’s like an EKG or an X-ray, exposing the inner
workings of our system on a real-time basis. We are no longer plumbers and
water engineers; we’ve entered the world of preventive medicine.”
But can Peleg shift the world’s lowest-tech industry to big data
solutions? “The best and worst thing Peleg has going for him is that he’s ahead
of the game,” says Aaron Mankovski, who runs Pitango Venture Capital, Israel’s
largest VC firm, and has yet to invest in TaKaDu. “Water is a cautious,
nearsighted industry,” he adds. “But I have no doubt that eventually all
utilities will go this direction. They will have to, to survive.”
TaKaDu’s headquarters are above a Pizza Hut and a pastry shop, in a glass-and-granite office building in a quiet suburb of
Tel Aviv. Inside, the offices have the obligatory signifiers of the tech
startup: minimalist couches and bean bag chairs, walls painted primary colours,
and an open kitchen with a large picnic table for meetings and meals. The walls
bear poster-size photographs taken by TaKaDu employees depicting water in some
form, from dewy fields to foaming falls.
Peleg’s office is cozy and modest. There’s little here to indicate
he’s a veteran of three startups. He sold his last one, YaData, to Microsoft,
less than two years after he founded it. (A leading Israeli newspaper reported
a rumoured sale price of about $30 million; Peleg says he’s obligated by
contract not to disclose the sum). YaData was another algorithmic venture; its
software helped online advertisers to more accurately target customers.
Peleg was influenced by his grandfather, who built Tel Aviv’s
first luxury hotel. At 13, Peleg hacked the first Apple computers that came to
the market in Tel Aviv and created a version with Hebrew characters that he
sold to local businesses. At 17 he was accepted to Talpiot, the Israeli Defence
Force’s most elite technology unit. Over eight years he learned to develop
military drone operating systems and software to automatically -identify key
visual information in satellite images, such as tanks, missiles, and other
targets.
Peleg then joined Elbit Vision Systems, a company that develops
software for large-scale textile production. The software analyses visual data
to identify flaws in fabrics. TaKaDu is doing something similar today with pipe
flows and pressures. “It all boils down to finding new ways to understand
aberrations in data,” he says.
Peleg got the idea for TaKaDu at a technology conference in Vienna
in September 2008, when he met a water engineer specialising in the Scada
(supervisory control and data acquisition) systems that collect data from
pipe-embedded smart sensors. The sensors use mechanical methods, such as
rotating wheels, as well as ultrasonics to measure network flow and pressure
and can transmit hundreds of data points every 15 minutes. Peleg wasn’t
interested in the hardware, just the information generated. “I asked the Scada
guy what he does with the data. He says, ‘We store it.’ I thought, ‘This is it!
I’m going to mine this dormant data for golden nuggets.’ ”
Within a few months of the Vienna conference, Peleg had hired five
programmers and was running TaKaDu out of his living room. A number of Peleg’s
early recruits were from the Talpiot programme. “I said, ‘Now our enemies are
not people, but the leaky pipes underground,’ ”
Peleg recalls. Instead of using algorithms to scan images, he was now building
software that had larger implications for Israeli security and that might even
help wasteful and drought-afflicted nations worldwide. His wife, Naama, wrote
payroll cheques from their family checking account: “Finally Amir was doing
something real,” she recalls.
Hagihon CEO Yinon is munching cookies in a bunker-like basement that once functioned as the utility’s control room. “We no longer
have a physical control room—TaKaDu has put it right here,” says Yinon, wagging
his iPhone 6. “I can find out anywhere if my meters are accurate, my water
quality is clean, my pressure is good, my flow is normal, my pumps are working
properly, my infrastructure is humming … all
these layers are integrated online.”
Six years after founding TaKaDu, Peleg has 35 -employees and
offers utilities a cloud-enabled service that presents the full gamut of
information about the network’s
operations. Peleg is essentially trying to do for water networks what Thomas
Siebel did for customer relations management (CRM) in the early 1990s: rethink
the interaction between organisations and customers and integrate all the
layers of information a company has about a customer into a single interface.
TaKaDu’s software establishes a baseline of “normal behaviour”
within each network. The better it understands normal patterns of water flow
throughout the day, the more accurately it can detect aberrations that indicate
a leak or burst. It knows that water flows are highest in mornings and
evenings, before and after people are at work. It also considers local factors:
At a Netherlands utility, for example, the system detected spikes of flow at
regular intervals one Friday afternoon; it noticed that these patterns
corresponded with breaks in play during a World Cup game between the
Netherlands and Spain, when fans were flushing toilets.
The software can also detect water theft. At Unitywater, a utility
in Melbourne, the system noticed abnormally large flows coming from a fire
hydrant; officials were notified, and they found a strawberry farmer siphoning
water from the hydrant.
Within a year of adopting the TaKaDu system, Unitywater saved more
than 1 billion litres of water. That translated into savings of more than $2
million. The utility also reduced the time it takes to repair problems in its
network by more than 60 per cent.
TaKaDu is not a standalone solution for utilities. “We’ve found
that TaKaDu works best when connected with other systems,” says Yinon. Aquarius
Spectrum, a company run by Israeli Zeev Efrat, uses advanced sound equipment to
detect the exact location of leaks. Yinon uses TaKaDu software to identify the
location of a leak within a neighbourhood and then Aquarius’s technology to
find the pipe it’s coming from. Another Israeli startup, Curapipe System,
offers an automated leak repair system that plugs ruptures without digging.
When Peleg notes that TaKaDu has no direct competitors, it’s more
a lament than a boast. “There are companies doing many different aspects of
what we do, but none yet that encompasses all.” The French water and waste
management company, Suez Environnement, recently introduced a similar
smart-network service called Aquadvanced, but it’s too new to the market to
have made an impact. Peleg insists that he wants competitors to come in and
“wake up the market, so utilities get more familiar with the future we’re
all headed toward”.
As it is, only about 20 per cent of utilities worldwideand fewer
still in the US—are using smart sensors in their infrastructure. “Not everybody
can see it yet,” says Zvi Arom, a member of TaKaDu’s board. “There are those
utilities you meet and you tell them what TaKaDu can do, and they say, ‘I may
as well believe in Snow White and Santa Claus.’ ”
Peleg lives with Naama and their three young children in an agricultural village about halfway between Tel Aviv and
Jerusalem. Their house is a modern expanse of glass and steel surrounded by
eight acres of heavily irrigated farmland that Peleg calls his Eden. He has
olive, pomegranate, avocado, lemon, fig, mango, and pecan trees, a vegetable
and herb garden, and a small vineyard with merlot and chardonnay grapes.
The family pays the equivalent of thousands of dollars a year for
water. Peleg, an avid cook who pickles his own cucumbers and brines his own
olives, takes a certain pride in his water bill: “Americans think water should
be free and unlimited, like air. But the philosophy in Israel is, if you want
to have a garden or a pool, fine—pay for it!” Israel has a three-tiered pricing
system, he says: “We’re only allowed to consume a certain amount of low-cost
water for a family of five, for example. Above that quota the water is 50 per
cent more expensive. On the next tier, the pricing goes wild.”
The pricing structures of many US water utilities, Peleg says,
encourage rampant consumption: “A third of the counties in America still charge
a flat rate for water, whether you are a business or resident, you pay a
flat rate. Like for $9.99, it’s all-you-can-eat water.”
Last July, as California suffered through a crippling drought that
would claim 200,000 acres of crops, a pipe broke under Sunset Boulevard in Los
Angeles and released 20 million gallons of water. “Our software could have
prevented such a burst,”
Peleg told a panel at a recent conference in Tel Aviv. “It would have picked up the
problem when it was just a small leak.”
This year, Peleg will introduce a cloud-based service for US utilities that
monitors water quality, which is tightly regulated by the US Environmental
Protection Agency.
Peleg and his peers are betting that as hardware costs decline,
data tools improve, droughts become more common, and water pipes get older, the
US will become a more lucrative market for their products. “It is becoming a
much lower-risk investment,” says Pitango Venture Capital’s Mankovski. “The
biggest challenge for a water startup is to get the initial 10 to 15 customers
and proof of concept. Peleg has done this and has ushered those relationships
into long-term contracts. He has a real chance of providing the de facto tool
for municipalities worldwide.”