Raz Razgaitis, Co-founder and CEO of FloWater
Raz Razgaitis, co-founder and CEO of FloWater, talks with Brian Ardinger, Inside Outside Innovation Founder, about the disruption that’s happening in the water business, what it’s like to be working in a big company and move to a startup, and everything in between.
Interview Transcript with Raz Razgaitis or FloWater
Brian Ardinger: On this week’s episode of Inside Outside Innovation, we interviewed Raz Razgaitis. He is the co-founder and CEO of FloWater. We talk about the disruption that’s happening in the water business. What it’s like to be working in a big company. And move from there to a startup, and everything in between. Let’s get started.
Inside Outside Innovation is the podcast that brings you the best and the brightest in the world of startups and innovation. I’m your host, Brian Ardinger, founder of InsideOutside.IO. We’re a provider of research events and consulting services that help innovators and entrepreneurs build better products, launch new ideas, and compete in a world of change and disruption. Each week we’ll give you a front row seat to the latest thinking tools, tactics, and trends, in collaborative innovation. Let’s get started.
Welcome to another episode of Inside Outside Innovation. I’m your host, Brian Ardinger, and as always, we have another amazing guest today with me is Raz Razgaitis. He is the co founder and CEO of FloWater. Raz, welcome to the show.
Raz Razgaitis: Thanks Brian. Great to be here.
Brian Ardinger: I’m excited to have you on board because you’re trying to disrupt this new world of water. So let’s start there and talk a little bit about FloWater.
Water Disruption
Raz Razgaitis: Well, Brian, our whole mantra is really around changing the way the world drinks water. The foundation of our company is to provide decentralized distributed water purification wherever consumers work, rest and play. So that they can have what we believe is the world’s best tasting water, on tap, wherever they are. And the purpose behind that is to completely eradicate, not only single-use plastic water bottles, which are the new environmental cigarette, but also to provide a pathway to eliminate all packaged water.
Because not only does it end up in oceans, lakes, rivers, and landfills. For example, right now, Americans are drinking the equivalent of two credit cards worth of plastics. Microplastics. Wow. Every month as a result of their tap and bottled water. It’s not just bottled water, but they’re actually drinking their bottled water that’s in now microplastics in their tap water. Exactly. We’re literally now drinking our plastics, and the whole idea of our company is to completely eradicate that.
And what we’re doing is we’ve built a piece of technology and a piece of hardware that right now, it’s primarily available to businesses and companies and organizations. And so that’s generally hotels, schools, corporations, gyms, retailers, where we provide a FloWater refill station that has a very powerful purification system in it, that takes any tap water effectively anywhere in the world and turns it into something that will be better tasting than your favorite bottled water brand.
But it’s available in a refillable format so that you are reusing either a multiuse bottle or a refillable bottle, or even a single use bottle that you’re refilling. So if you end up having to buy a single use plastic water bottle, but you get to refill that five times, we’ve just seen an 80% reduction in the usage of single use packaging, which is a great thing.
Innovation in Venture-Backed Startups
Brian Ardinger: You’re a serial entrepreneur. Have started and run a number of different companies and FloWater is your most recent one. But you started your career in the corporate space. I believe in Johnson and Johnson and Eli Lilly. And so you have that fortune 500 kind of background as well. Starting your career out in the traditional big co type of environment and transitioning to become a entrepreneur. What are some of the things that you learned that prepared you to be innovative outside in the venture-back startup world?
Raz Razgaitis: That’s an interesting question. No one’s ever asked me that before. I think one of the things that big companies do a really good job of, there’s a virtue to it and then a vice at times, spending time on strategic planning is really, really critical, and oftentimes in a startup environment and when you’re forging a company. There is so much activity that needs to be generated at that.
Sometimes people, all of us have this propensity at times to lose sight of the big picture. Because you have to be into so much of the granular details as you go and as anyone that started a company, and has run it for a few years realizes how much stuff there is to do. Strat planning is one of those things that is really critical.
Let me use the counterbalance. I think one of the things that doesn’t travel as well is that, in big companies, you’re generally not rewarded or it’s very difficult to acknowledge points of failure or strategies that didn’t work. Or in the middle of a year saying, Hey, this is a failed strategy. And I think that’s one of the things that good entrepreneurs are really good at doing is identifying, all right, something’s not working here. We’ve got to pull the rip cord on this. We’re going to go in a different direction.
Entrepreneurial DNA
Brian Ardinger: Let’s talk about, have you always been an entrepreneur? What tripped that trigger to say, okay, I’m going to jump out and start something on my own?
Raz Razgaitis: I suppose I’ve always had entrepreneurial DNA. I remember I was in college. And I had an opportunity to go take an intern assignment at a school in Indiana at Anderson University. And I was interviewing really preeminent market research firm. It was like a highly coveted position or hundreds of college students, marketing and business, undergrad majors that were applying for it.
And I actually got an interview and I went in and I think it went fine up until the point where I started asking what would I be doing? And they said we’d be doing faxing and filing. I think that’s when I started to realize that I just would find some of this stuff relatively boring. You have to start somewhere, so you’re going to be doing a startup company. You are literally taking out the trash and you are doing all of the faxing and filing. So there’s a fair amount of Admin work.
But I ended up actually running the sales organization. I sold Cutco knives, and then ended up running an office. I did this for a couple of years when I was in college and had an office in Sandusky, Ohio, where I hired a hundred college students and they worked for me all summer and train them and wrote scripts and went on field calls with them.
And that was my alternative to going and getting a job where I was going to be doing a lot of filing. I think that’s where I started to identify, just had these tendencies to be wired to create. I think that’s one thing that entrepreneurs really do relish doing, is they like creating. And it’s not that people in big companies don’t create, they do. You know, the reality is you’re not creating as much. You’re having an influence or an impact on rather than creating from something raw many times or that doesn’t even exist.
FloWater Journey
Brian Ardinger: How did you get involved in FloWater? And what was the big idea behind that and how did you decide, okay, this is what we’re going to take on.
Raz Razgaitis: I was in Silicon Valley and I met a guy who initiated this concept of FloWater, which has morphed over time, and he was looking for a cofounder and he was out raising money. It was literally almost 7 years ago to this day. It was very early January of 2013. We basically forged forces from there. I got to know him over a period of a couple of three months and then started working on some of the concepting and the business planning and modifying some of that, and the financials.
And then forged it formally by May of 2013 where I came on board as CEO and co-founder. And originally a big portion of the idea was to sell vended water. It wasn’t the only part of the idea. I mean, this is much more of a platform business that we’ve evolved to over the last three years. Originally, we were going to do is vended water college campuses where the big target. And you’d pay per fill, you know, so you had a refillable bottle and you’d pay 75 cents using a credit card and swiping. It kind of goes back to my point about developing strategy, but then also being nimble.
We did that for about six months, and we also did this other model where we leased the equipment into hotels, schools, corporations, but we were very early on. When I say hotel schools and corporations, I make it sound like there were hundreds of meetings. It was singular. It was like a hotel, maybe a CrossFit gym. And the retail model at that time just didn’t work. We couldn’t get it to work.
It was very, very painful, but I felt comfortable hitting the kill switch on that. We migrated the model really full force over to the one that was getting a ton of traction, which is the model that we’re in right now. Now, that being said, over the last three years, evolution of the business is pretty extensive. Where what we are doing is building out a platform. I always cringe when someone says like, we’re the Uber of this and we’re the Apple of that, we’re the Warby Parker.
Now, that being said, let me put an asterisk, which is strategically what Amazon did. Bezos did that was so brilliant, was picked a pathway in eCommerce to drive a wedge in, which was books. And then once he drove that wedge in, was very narrow, but went very deep. Then he went horizontal. Like deeply horizontal. Where now it’s kind of ubiquitous with much of eCommerce and to some degree what we’re trying to do is pull a play out of that strategic playbook. Which is we’re going deep into hotels, schools, gyms, corporations, retailers all across the US. We’re starting to move internationally as we drive that wedge deep.
FloWater Working Horizontally
We’re also working horizontally. Actually, this week we’re launching our very first beta of an IOT connected device. In the next couple of weeks, we’re going to be formally launching a flow water multi-use reusable bottle, which is going to be intended to replace a single use piece of plastic or cardboard or corrugated or Tetra pack that you might be using at a retail store, and it is a bottle that can be refilled 5, 10, 15, 20 times for the price of a single use bottle with or without a FloWater refill station.
We’re in development of a consumer home unit, which we expect will launch by the end of this year. And there’s a multitude of other products that we are going to be developing over the next three years to develop this platform. And so the idea is really to develop an Amazon like platform wherever consumers work, rest and play.
The reason that bottled water is so prolific. Is not because there’s not enough tap water spigots. By and large, 99% of people are generally in a hundred feet or 50 feet of a water supply. The problem is that consumers don’t like, or they don’t trust tap water. In fact, most data shows that 65% to 80% of Americans in the US and these numbers carry to various degrees in some cases, much higher internationally is that they don’t like, or they don’t trust their tap water. As a result of it, they’re really reticent to drink it.
And there’s some good reasons why some of it is perceived, but some of it is very real. This micro plastics issue in tap water, very real life has aid, which is the chemical component and Roundup that is basically trickling into our tap water that is not able to be purified out by municipal water treatment plants, generally speaking, is now in trace amounts in much of our top water. The problem is that consumers don’t love their tap water. What our mission is to do is to get consumers to fall in love with tap water again and to ensure that they trust it, which really ties into this platform play.
The problem is that consumers don’t love their tap water. What our mission is to do is to get consumers to fall in love with tap water again and to ensure that they trust it, which really ties into this platform play.
So that’s how the business has evolved over time. That’s how I got into it. And today we’re at the point where we’re going to have 200 million single use plastic water bottles saved from the environment. By March of this year, we’re well on our way to 1 billion bottles saved, which has been our mantra for the last few years by the year 2022 and were quickly scaling across the United States and hopefully soon internationally.
Sponsor: Husch Blackwell
Brian Ardinger: Hey listeners, I wanted to pause this episode for a brief word from our sponsor, Husch Blackwell. Get Started Omaha is the premier startup event for the Omaha startup community. Providing an opportunity for startups, investors, the business community, and others in the entrepreneurial ecosystem, to come together to celebrate Omaha’s startup scene.
As a supportive member of the startup community, Husch Blackwell is proud to be this year’s presenting sponsor with prizes for each of our industry track winners. And a final grand prize, over $75,000 in cash and in-kind services will be awarded in support of the startup community. We’re looking for startups, sponsors, and everything in between to help make this event a success. And we hope you’ll join us. Learn more at www.Getstartedomaha.com. Now, back to the show.
Brian Ardinger: I’m curious to hear your insights on tackling big problems. I think we went through an era in the startup realm where a lot of the problems were small by comparison to guys spinning up an app in the garage and start something small. But now it seems to be a lot of those low hanging fruit types of businesses are off the table. Or somebody’s already positioned and has ownership of that space. So I see a lot more entrepreneurs trying to tackle these big problems, climate change, water, et cetera.
What are your thoughts on this evolution of startups into bigger problems spaces. And how do you think that’s going to bear out compared to the big companies that are trying to innovate in these spaces?
Startups in Big Problem Spaces
Raz Razgaitis: This is super interesting question. I think there’s one thing that I would say to entrepreneurs that are looking to start a business. One is that I generally try not to dissuade people on their ideas. If I have an entrepreneur that comes to me and say, Hey, I’ve got this an idea and I want to run this by you, and I’m thinking about becoming an entrepreneur, what do you think?
I generally have a rule, which is I won’t discourage them on the idea. And I will offer very judicious feedback on the idea itself. Because the reality is what do we know, about ideas. What gets proven time and time and time again is that market research and consumer feedback and validation is important. But at the same time, the sample size of one is a sample size of one, and so I try to be judicious on that.
I do try to discourage potential entrepreneurs from becoming entrepreneurs, and I tell them how hard it is, how difficult it’s going to be, how miserable they’re going to be at various points, how much sacrifice they’re going to have to make, because if they can handle that. Just hearing that they can’t handle being an entrepreneur. So I do want to make sure that they know what they’re getting into because that is definitively a truism across the board. No matter how good or bad your idea is.
Somebody has something they’re really passionate about, that reality is that even if it’s kind of a micro idea, we’re in a micro-environment where people are very particular people that have very specific requests or needs or desires. There’s a market for that, and if you’re starting out as a solo entrepreneur and you’re going to self-funded or you only have a couple of investors, it could be a really worthwhile pursuit.
That being said, those men and women that are making investments like big ideas with huge total addressable markets, particularly where there’s a winner take all, or most of the winners take most of the all. You know, what we see on social media and what we see in the Fast Company and what we see in venture reports are a lot of money pouring into a lot of big ideas. Not everyone’s idea is grandiose, but that doesn’t mean it’s not a great idea or it doesn’t have great application.
I get excited about the pursuit of creating something and doubly excited when it’s a big idea and it’s a pursuit of building something. And I can tell you, I’ve heard a number of investors say to entrepreneurs, Hey, that’s not a big enough idea. You need to be thinking bigger. You know? Okay. Sometimes that’s good advice, but sometimes it’s terrible advice. I mean, sometimes you know, what they really should be doing is going and finding a really interesting market where there is an unmet need or there’s a real opportunity to, in carving that out and building from there.
Entrepreneurial Skills and FloWater
Brian Ardinger: I love that concept. Because I do think that when I hear investors talk to entrepreneurs, they tend to put their own biases into the situation a lot more than is necessary. And like you said, that individual saying, Hey, I don’t think your idea is good, really doesn’t mean anything. It’s what the market says, and you have to test and experiment and try things.
Like you were saying, you know. You pivoted a couple different times in FloWater based on the feedback that you were getting from the marketplace. So I think that sounded nice. What are some of the skills that intrepreneurs or entrepreneurs should be cultivating in this new world of disruption and change in technology that would make them have a better chance of being successful.
Raz Razgaitis: One is to have an unbridled amount of tenacity and relentlessness, and especially in the face of adversity, “No’s,” everyone telling you that this is crazy, or you shouldn’t do that or what have you. Those are all pieces of data that are really helpful to procure along the way and along the journey.
In many cases, I’ll seek out from advisers or third-party people. In fact, one of the advisors that I use the most was one of my biggest naysayers. And he was in the water space and he’d been in water for 20 years. And he told me seven ways to Sunday why this wasn’t going to work. It’s really helpful, but you gotta be careful not to let it indoctrinate your thinking to the point at which you believe everybody, and you decided to do nothing unless you really feel like that that’s the most viable pursuit. It’s just going to require an unparalleled amount of tenacity to get things going.
ADVICE
- Seek out advice from advisers or third-party people.
- Be unrelenting as it relates to building out your team and getting the best talent.
- Stay really, really, really close to the customer.
The second is when it’s time to build the team. Be unrelenting as it relates to building out your team and getting the best talent. And removing non-performing talent. You got to have a dynamic where you can successfully grow and scale your business.
And the third that I would end with stay really, really, really close to the customer. And you have to be in front of the customer early on, especially always, but early on, especially because that’s the only way you’re going to see like, do people like the product? Are they willing to pay for it? Why are they saying no? Who are we competing against? What is this product issue here? What are the objections that they’re raising? Why are these actually not objections that you should be handling in a different way? What is the product strategy? The only way we learned where there was in the market was by getting out there and not just having one sales rep.
Sometimes I talk to entrepreneurs, they’re like, Hey. We’re starting our company and like, we need our first 20 customers. And we’re going to go hire a sales rep and they’re going to go call on them. I’ve asked, you know, how many times are you going to be reaching out, or how many customers are you going to go get? And they were like, well, I’m not going to go get customers. Like I’m busy working on, you know, product, et cetera, et cetera, whatever it is. If you’re a co-founder or a founder in a company, you have to be talking to, one of the founders has to be talking to customers. You can’t delegate that down.
More Information on FloWater
Brian Ardinger: Great advice, Raz. I really do appreciate you coming on Inside Outside Innovation to tell us a little bit about what you’re doing. If people want to find out more about yourself or about FloWater, what’s the best way to do that?
Raz Razgaitis: I am at Rich Razgaitis on Instagram and Twitter, and then you can get to us on Instagram at the company site at FloWater, F, L, O, W, A, T, E, R, and the web address is www.MyFloWater.com and My F L O W A T E R.com.
Brian Ardinger: Thanks again for being on Inside Outside Innovation. Look forward to seeing the new world that we are coming into the future. Thanks very much for being on the show.
Raz Razgaitis: Brian. Thank you. Appreciate you having me on.
Brian Ardinger: That’s it for another episode of Inside Outside Innovation. If you want to learn more about our team, our content, our services, check out InsideOutside.io or follow us on Twitter @theIOpodcast or @Ardinger. Until next time, go out and innovate.
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