The Downside of Disruption

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The Downside of Disruption

by Ari Raivetz

CEO, Organica Water

“Disruption” is a term that gets thrown around way too often these days. We constantly read about the latest Venture Capital backed companies that are going to “disrupt” this or that industry, only to learn later that their product or solution is really just an improvement on some existing paradigm in the industry.

While I am clearly biased, I think many would agree that Organica Water IS truly disrupting the wastewater sector. After all, we design facilities that treat 💩HUMAN WASTE 💩which look and smell like a garden (!) and are located smack dab in the middle of cities like Jakarta, Shanghai, Manila, and Budapest! It is hard to imagine a bigger change for a sector that has historically been highly conservative with an “out of sight, out of mind” approach.

We now have 96 facilities operating or under construction. That may seem small in an industry with more than 50,000 facilities globally, but apparently when you start turning that many poop
plants into gardens people start to notice. So, what kinds of tactics are we seeing the established players use to stop the change? And what strategies and tactics can companies use to combat this?

I think environmental technology companies like Organica face a particular challenge here, because the technology usually revolves around an infrastructure project, infrastructure projects are by nature capital intensive, and thus infrastructure industries are dominated by massive and well capitalized companies. Indeed, the biggest obstacle most environmental technology companies face in scaling their businesses is finding ways to partner with these mega players. The challenge is to convince them not to fear the disruption, and at the same time find ways to make it profitable for THEM to work with us and benefit from the disruption. Organica has overcome this challenge by designing a unique business model that leverages mutually beneficial long term partnerships with top industry players, combined with engineering automation via software coding, to scale as quickly and broadly as possible. Throughout this journey we have seen that there are many large players that are progressive and nimble enough to embrace the disruption, and thus gain advantage over those who are slower to recognize the future. But what happens when the fear takes over and the incumbent – especially a big and powerful one – begins to panic?

Over the past 6-12 months we have experienced this first hand, and it can be quite challenging. In one case we had a dedicated smear campaign launched against Career8us designed to spread rumors about our references and our technology. Similar to the “war on facts” we now see in the US political spectrum, we chose to fight this off by providing REAL DATA from our many references and existing customer base. From the start we have invested in data collection for a variety of reasons, but it never proved more crucial than when we used the data to fend off this affront from much larger and long established players.

Another example was in Australia, where a large EPC contractor signed an agreement with Organica to use our technology to position itself for a bid on a potentially very large (140 MLD) project in Melbourne which called for “innovative” technologies for a new expansion facility. Organica signs exclusive agreements all the time – either for a market or for a specific project – and these agreements have proven to be an important tool to enable us to work with the large players in our industry while protecting both sides’ interests. In this case, the EPC used our “innovative” references to qualify as a potential bidder. Unfortunately, after being shortlisted as one of the final bidders, they then chose not to proceed with our technology to position themselves to submit the final bid. From our perspective they practically dared us to call them on it.

My view of start-ups – especially those that are in the earlier stages of disruption like we are – is that the LAST thing you want to do is get involved in litigation. It is a huge vacuum – sucking time, money, and positive energy – and distracts from the core mission. However, there are some cases where you have to defend your position. For example, if an exclusive partnering strategy is core to the mission, you must take a stand to defend that strategy, no matter how large and deep-pocketed the offender may be. After many months of diplomatic negotiation, just like that small starfighter in Rogue One, eventually we had to fight back. In this case, we issued legal proceedings against the EPC. The suit was recently settled, and we were very happy with the outcome.

 

To summarize, the key takeaways for environmental technology companies on the path to disruption are as follows:

  • BE PREPARED – Some of the more stubborn incumbents may play dirty, so you need to be ready
  • FOCUS ON DATA – The more data you have to back up your new solution the better your defense will be
  • FIGHT BACK – Protect yourself with strong contracts, and don’t be afraid to enforce it even if the other side is a massive industry player

 

For more on disruption, check out this great piece from Steven Sinfosky of Andreessen Horowitz on the four stages of disruption. What stage of disruption do you think Organica is at currently?

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