By Carlos David Mogollon,
Managing Editor - Industrial WaterWorld and Water & Wastewater International
An Arison Group company incorporated in Luxembourg last fall to consolidate Carnival Cruiseline heiress Shari Arison's investments over the previous two years in water technology coordinated by Oren, Miya was bankrolled with $100 million by Arison Investments to find a solution that would make the world a better place.
As such, the former chairman of Mekorot, the Israeli national water utility, and chairman of the WATEC water industry conference, Nov. 17-19, in Tel Aviv chose the topic of pressure management to reduce urban water losses, noting that last year was the first that there were more people living in urban rather than rural areas globally, according to the International Monetary Fund.
Rather than spend trillions of dollars on repairing aging, leaky pipes, Oren thinks it more efficient and economical to first employ pressure management techniques to ensure water that's treated actually reaches the tap. That allows piping rehabilitation to be limited to the most crucial areas, and makes every dollar count in the provision of quality water. And, with emphasis worldwide on improving infrastructure as part of a global economic stimulus to stunt the effects of recession, it would allow that money to be better spent.
A shorter follow-up interview on the North American market can be found at: Q&A: More with Miya's Booky Oren:
The following longer interview corresponds with an article that appeared in WWi("Executive Watch: Waste Not Want Not with Miya's Booky Oren," December 2008/January 2009) and offers more detail on the company's global business plan:
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PennWell: Tell us a bit about yourself to start out, as we understand your background is in the information technology industry?
Oren: First of all, I didn't only move from the IT industry. Before that, I was working as a VP in marketing for Visa. Before that, I was with a German company. So, the first thing I'm willing to share with you is I am not a water engineer. I am a businessman with a degree in business. Someone offered me an opportunity to be involved in what is the largest irrigation company in the world, the company that invented drip irrigation. And then, I was struck. I understood. That after so many marketing management roles in my life, the most attractive, simple business model in the world is water. Now, I need to give an explanation why -- because the demand for water is all the time increasing. Population grows, an increase in the standard of living... Supply of water is all the time decreasing -- global warming, increasing contamination. So you see a trend that from the one side the demand is increasing, the supply is decreasing -- but we need to supply water to the people. And then I was understanding, there is actually an abundance of water. The seas are full of water. So it happens to be that it is only a question of technology to offer this solution between the demand and the supply. This happens to be a $1.5 trillion market of how to supply water to the population. And when we're talking of technology, first of all we take this from natural resources prices to an economic challenge and we need to find what is the logical solution in order to provide the water to the customer in the most effective way and the best way possible. When you're talking about desalination -- and I run (had experience with) many desalination plants in the world, and later on I will comment on what is my career -- 20 years ago, you're talking about the price of one cubic meter of desalinated water was $2. Now, we're talking about 60 to 70 cents. Again, 60 to 70 cents is really expensive and [involves using] a lot of energy. So, I understood it and, after two years, was voted to become the chairman of the board of Mekorot, which is the Israeli national water company. I moved for three years from the private sector to the governmental sector. We supply 70% of the water to Israel, one of the most developed water utilities in the world, operating more than 30 desalination plants. Regarding wastewater, recollecting 75% of the water, purifying them and reusing them. It is really a different world of water. And water management, we have created something very developmentally interesting. We don't have much water, including those coming from the – sea of Galilee in the north of Israel and desalination from the Mediterranean coast at Ashkelon or from Ashdod or maybe the aquifers (which are another source of water for Israel). And to blend and to deliver water while checking that there will be no red water phenomenas because of differing salinity of water quality is not an easy issue. And then we really turned Israel into the Silicon Valley of water technologies. After three years there, I moved back to the private sector, then I was assigned by Shari Arison, the chairman of Arison Investment, and she told me something very easy. She told me: "I will finance you, the business plan but please find for me the next big thing in the water area." I was there for five years. I saw that there were many people looking in the same arena, so it was a joke when I said it was an easy task. It was very challenging.
PennWell: I would imagine also that, because you're not necessarily a water engineer, it was easier for you to look at the overarching picture and single out this as a particular need that required a solution?
Oren: I think that was my reputation. But in order to do it in a more efficient way, I would put a few brilliant people in the industry and we really analyzed from an economic view what are the major trends in the water avenue. It was a great opportunity because, you know, you can think outside of the box -- what are you going to do? I saw a few major trends in the world. I can look to desalination, to water purification, to initiate a venture capital or private equity fund. I have the freedom to do everything in order to do something so that it would be valid so she would approve the business plan and inject the money. She told me: "I'll give you $100 million as a first injection if it's worth it."
PennWell: It's kind of nice having someone offer you a blank check like that to do something challenging with, something worthwhile?
Oren: It's not a blank check. It's a check that you need a lot to offer in return. Anyhow, we analyze first of all the organization and the solutions. In 2007, we have the first time that more people are living in cities compared to rural areas. And surprisingly, those people needed water in the center of the cities. I don't care if you need water in the mountains, but now you need to supply water in the center of Minneapolis, the center of Chicago, the center of Kuala Lumpur and Beijing -- via the same aging infrastructure. So it's really something to contribute here -- because, from one side, you need to increase the amount of water to the center of the city, from the other side, you need to do it using a very aging infrastructure.
Then, we have to assume, that there would be no mayor and no governments in the world that would not supply water to the cities. We analyzed the options that they have in order to cope with this challenge. First of all, they can put regulations in to reduce consumption or increase the price. The customer won't love it. The politician won't love it. We see this regulation from time to time: Please, in July, don't irrigate your landscape. The other option is to increase the quantity of water that you supply to the city by creating new desalination plants or reused water creating new water treatment or new water from rivers or groundwater sources -- but supply more water to the cities. I think that it's really -- it's not unachievable -- but everyone really needs to do it. And it's a very legitimate step. But it costs a lot of money. And the worldwide figure, except for the U.S. -- and in a moment, I'll emphasize why except for the U.S. -- is 33% of the water that's supplied on average to the cities don't make its way to the tap. That's the best water quality and when I'm talking about average, that's the major mistake. Why? Because it's meaning that, when I'm talking about São Paulo, which is around 33%, in one neighborhood I'm losing 45%, another 20%. Average is something that's really mysterious. Why except for the USA? Well, because in the USA, they don't lose water. In the USA, we don't have the data. The awareness in the USA is not so high.
PennWell: It assumes that everything is perfect with it's water?
Oren: Yes, I assume we have something to improve. You know, I heard from the CMO -- the chief marketing officer -- from GE, that in Chicago, they're losing 60% of their water via leaky pipes. I heard from a professor at Yale that it's somewhere between 15% and 45%. So, it's no question that in the States, it's the same condition. For the time being, there is not enough data.
PennWell: At the same time, you could also look at California where there are a number of desalination plants in the planning stages up and down the coast, but do they know how much water they're losing via leaky pipes?
Oren: It's a good question.
PennWell: I was chatting yesterday with some people from the European Investment Bank and an interesting comment that was made was that people often come to them saying they want to put in a desalination plant and the first thing the bank asks is what are your water losses. And if those losses are above an unacceptable level, they'll say, "We're not going to give you a loan for a desalination plant, but if you want us to help you with reducing your water losses that's something we would consider that before even discussing a desalination plant."
Oren: I would like to emphasize something that I don't want to get confused about. I think that desalination is very important. In Israel, for example, we need to put more and more attention there because if you accumulated all the water losses, we would still not supply the demand. So, I think that when we are talking about the water network, we need to look at comprehensive solutions. There was a major debate in London two days ago, where Thames Water wanted to put in a desalination plant and the mayor of London said, "Guys, it doesn't seem to make much sense to put in a desalination plant when I am losing up to one third of my water. I should bring more water to the city, yes? The question is how to do that more cost effectively." Desalination is a good solution, but I think, in cities, with high levels of losses - first of all - take care of it. And that's continued to be our slogan. Now, I'll tell you the story of how we got to Miya. We begin to look at it and were surprised to learn that in order to reduce the losses from leaky pipes you don't need to replace the pipes. Why? Ask me...
PennWell: How?
Oren: Ah, good question.
PennWell: I ran an article on this topic last year, which is why I didn't ask, "Why?" right away. I was waiting for the answer.
Oren: If I have a thousand miles of pipes and I create a huge trench in the middle of the streets and replace 100 miles of pipe, I will not reduce the leakage one bit. Why? Because the remaining 900 miles of aging infrastructure will leak more since the pressure now from the new pipes will move there. That understanding was begun in the UK almost two decades ago; and people understand that, if you would like to reduce water loss, you need to bring to the network a combination of pressure, technology and know-how how to do it. You need to control the network. This methodology was later adopted by the International Water Association.
PennWell: The article we ran last year was actually from a gentleman from Mekorot.
Oren: Who was it?
PennWell: Saul Arlosoroff. I believe he was a retired director of the company.
Oren: Oh. Anyhow, so that was the methodology later on adopted by the IWA. The equipment is there and the know-how is there. But, then, we were surprised to see that there are many proven projects all around the world of reducing the water loss. Still, that's not become the choice of preference. You cannot see many places in the world that do it on a large scale. And, then, we tried to understand why.
PennWell: What conclusion did you come to?
Oren: That we should initiate Miya. The idea was that there are a few things that if you compare the water world, between the year 1800 to 2000, the water price was almost zero. When you check what's happened to the water price in the last decade, mainly due because of water scarcity and more and more desalination and wastewater, I assume that if we really calculate the real price of water now -- including energy, including infrastructure, including everything -- the price of water now, it's at least 30 cents per cubic meter. So, I assume that, in less than 10 years, the price of water increased at least 10 times.
PennWell: That's a fair assumption.
Oren: That's also because people are moving from collecting rainfall, where the price was almost zero, to producing water. Even if you compare the water price compared to the oil price, even oil didn't increase its price by a 1,000% in less than 10 years. So, I think that the awareness to the water scarcity and the price of water promoted people to come from the business arena to find the right way to decrease that price. And, when you're losing such a large amount of water, you are losing a lot of water, a lot of money for treatment, a lot of energy, a lot of chloride, a lot of fluoride -- everything. And there's a lot of money that you need to invest in unnecessary infrastructure. If, on one side of the water, I'm losing -- then I need to increase on the other. Let's make the assumption that in my city, the population increased 20%. Instead of increasing infrastructure 20%...
PennWell: You also increase environmental risk due to the disinfection that's required, related chemical handling issues, etc., etc.
Oren: Precisely. When you deliver more and more water and your pipes are leaking, it's not practical. Any difference in pressure and contamination can come into your system. Then we begin to create something for which it's very important to understand the principle. Miya didn't invent the wheel.
PennWell: That would tie into your comment during the press conference a couple days ago that: "the answers are already here." All the solutions are already here; we just need to employ them in the right way.
Oren: Yes, and now I have a new expression -- we didn't invent the wheel, but we created the vehicle...
PennWell: I can see the marketing plan now.
Oren: Meaning that everything was there, the technology was there, the know-how was there, the awareness was there. So, what we did was to create Miya, creating a global organization with a cumulative experience of those people that made those projects worldwide of 500 years. We acquired those technologies that can serve this solution.
PennWell: Give me a timeline, if you could, on when all of this occurred?
Oren: In two years. At the end of 2006 -- November 2006 -- she approached me. I took six months to think. And, since then, we are running. We created activity in Brazil based on a relationship with a guy named Julian Thornton with 27 years experience with this issue. We created activity in Canada. We have a lot of experience in America as well with a company called Veritec. We teamed with a guy named Stuart Hamilton that runs the largest active leakage control company in the UK, employing more than 180 people. Then he sold it two years ago, so he's now part of Miya. We teamed with Gutermann, which is a Swiss-based company that's the leader in the world as far as active leakage control equipment with offices in Australia, the UK and the USA. We team with an Italian guy called Marco Fantozzi with more than 20 years experience in this arena with a Croatian company called IMGD that has been working for many years in all this Balkan area. We initiate a company in Romania called Romiya with Grup Romet, a 130-million-euro group that's working in the water arena, so we created with them this joint venture. We acquired a company in Israel called Dorot, that is selling $35 million in 70 countries. We partner with a company called WFP in South Africa that's working in South Africa and Australia. We teamed with a guy called Roland Liemberger that was a World Bank expert in developing countries for water loss.
PennWell: As what? What will he do?
Oren: He will run for us all of the Asian activities. He will be located there. So, what we acquired with all these companies and by creating this business structure, people that work on small and medium-sized water loss projects in 67 projects worldwide in the last 20 years -- we create the most robust global network to deal with this issue.
PennWell: How many employees does Miya have?
Oren: You ask me now or tomorrow?
PennWell: Now, I'm a bit nervous about asking.
Oren: I think a little bit below 500, but really I don't think that will be the same in the future. I'm sorry. I hope that this will not sound arrogant, but we have a plan and very strong backing. With this, we began to approach the market and we are now in the process of dealing with a few projects worldwide with a value of a few hundred million U.S. dollars. These projects will bring the know-how, technology and even financial solutions. And we think that we can really influence the water balance of urban areas. If you as me a very good question on who are my competitors, I'll give you an answer. Ask me.
PennWell: Who are your competitors?
Oren: Ah, good question. Really, the way that we define the company, for the time being, I don't see any competition. And I would like to elaborate why. Because when we first got involved in the business of water, there are two strategies. You can create a red ocean strategy or a blue ocean strategy. Red water expects that you are going to the same market that exists and compete with the current players mainly by reducing the prices -- you know, it's bleeding. It's become red. Blue ocean means you define a new arena. The comprehensive offering of Miya is really an invitation for cooperation. When I look about equipment providers, I can acquire the equipment, I can invest in the company, but I'm looking for good equipment for this solution. If you have a big engineering firm, say Black & Veatch, Montgomery Watson Harza (MWH), etc., they don't deal with the technology. They don't own the technology. I'm a solution provider. I give an A to Z solution. And I think they have a lot to run on, but I'm not dealing with desalination, I'm not dealing with wastewater, I'm not dealing with stormwater solutions. Really, the solution is that for this niche, we would like to be the significant player in this niche. We're not SUEZ and Veolia. I'm not billing the customer. I'm at a different level. So, when we position Miya -- and we think it's almost an invitation for cooperation -- because we love to work with almost everyone in this industry.
PennWell: Your structure is based on cost-benefit fee structure?
Oren: It will be dynamic. First of all, it's different from customer to customer, but part of it is cost-plus. Part of it is, because of our international backing, we are willing to take risks. It's not for us a risk, we feel, because we believe in our solutions. We would love to take part in any form and place. Again, it could change between countries, between trade groups, etc.
PennWell: Are there companies out there who would consider themselves your competitors -- or you competitive to them?
Oren: I assume that an equipment manufacturer that competes with Dorot or with Gutermann can see themselves as Dorot and Gutermann competitors, but again what Miya gives is broader. First of all, all the companies that belong to Miya continue with their own activities. But when I am involved in a project -- and that's our major invention -- I'm not competing with a manufacturer or an engineering firm or with a utility. We positioned Miya in a very specific location on the value chain of the water market. Our customer... First of all, our definition is to increase efficiency in the urban areas. GE, for instance, is not competing in the urban areas with what they are doing mainly. So, we are increasing efficiency in the urban area and our customers are the water utilities. That's us. Because of that we are different.
PennWell: That means that Veolia is your client?
Oren: Yes. The answer is definitely yes.
PennWell: At lunch today, I sat next to the editor of Metering magazine and he'd mentioned that it had put on a series of seminars on water loss, leakage and issues like that. He was commenting on Miya, saying to me: "Yes, they showed up at one of our meetings. They showed up at the next one, paying more attention and taking more notes. Then they showed up to a third one." And he said he kind of saw where you were going with it. This was regarding events going on with London at the time. Are there projects that you can discuss that kind of highlight for you some of the things being brought together that weren't being brought together before, regarding comprehensive solutions that were needed?
Oren: First of all, if I would like to define Miya, I would say that it's the most new old company -- meaning we launched only the day before yesterday, but with a cumulative experience of a few hundred years. If I can take for example a (pipeline renewal) project in Sebokeng (South Africa) that WRP, which is part of Miya Group, did, it was a half-a-million -- 400,000 -- citizens area, it was a performance based project, they reduced the water loss significantly over a three year project. In order to initiate such a project, they took a mortgage on their house because they don't have the Miya backing. I assume that from this project they could create a few more houses because the results were great. What I would like to emphasize with this reference story is that it's not only that the methodology is there. It's that the methodology is proven and it's working. In Zagreb, we have the same issue of reducing water loss. When I mentioned before the story about the wheels and the vehicle, it's not that incidentally we were looking for the wheels. Why? I assume that this industry is the most conservative industry in the world -- and I've been around a few industries...
PennWell: Why do you say that?
Oren: In a moment... and good question, by the way.
PennWell: I'm catching on.
Oren: That's better. Why it's a conservative industry? It's because people in this industry, at the end of the day need to supply water. Any mistakes and people will, eh...
PennWell: Die?
Oren: Maybe. When I work in other industries and when you come with new technologies -- the customer loves you because now he can create advantages over his competitors. When you come with new technologies to our industry, the first question is: "Can I be second?" or "Who checked it?" So, we understood as part of analyzing the market, that if we would come with a new concept, it would take us 15 years to bring it to the market. That's the reason we identified a proven wheel that can shorten the time that it takes us to bring our vehicle to the market. I hope that now you see why I emphasized about this conservative market and about the new old company that is Miya.
PennWell: That's true. Typically, when you have new technologies, by the time it's actually released, it's actually got so many years that it's been pilot-tested within the marketplace...
Oren: And Miya, the day before yesterday we launched it, but there's more than 100 years of experience behind it worldwide.
PennWell: There's something else interesting that you said that probably adds another element to what you bring to the table compared to another project that doesn't have Miya backing. Because you're backed by a major Israeli financial institution, you probably can provide your own financing for projects that you believe in.
Oren: The answer is in Pittsburgh, yes, but fortunately I'm not negotiating with you. Regarding being an Israeli company, we're a global company registered in Luxembourg. We have Miya Canada, Miya Brazil, Miya South Africa, Miya Croatia, Miya Switzerland, Miya Australia and Miya Israel...
PennWell: What was the reason for incorporating in Luxembourg again?
Oren: Because we are a global company, so it's very important to understand. We don't think that there should be any restriction to work with Miya solutions. We think that everyone has the right to get this solution and not relate into any religious location. We are working globally.
PennWell: It somewhat relieves an objection that might be there otherwise?
Oren: Again, think how you define your activity in advance in order to overcome any obstacles. And I would like to emphasize something you mentioned earlier regarding linkages between energy and water. I'm sure you're familiar with the figure in California that 19% of the energy is invested in supplying water.
PennWell: And, in addition, if you reduce that to the amount of energy that municipalities use, it's a much higher share.
Oren: Yes. And if we look at those leaky pipes, that's energy going down the drain -- not just water.
PennWell: And if we're thinking about a green world and sustainability and climate change...
Oren: So, what I think that Miya brings to the table is a new old concept. It's really creating a win-win situation. It really can have an impact on the water balance of the world. That's all really.
PennWell: Are there other things that you can get into that could sort of add to this element and extrapolate on what you're doing? One would think that -- in addition to doing this -- if your focus is on reducing water losses, you could also be going into metering technologies. You could also be going into a variety of things that other companies are doing that relate to identifying where there are water losses. In effect, there also could be a situation where you identify critical areas where you could do piping repair and services of that nature. Are there other investment targets that you may have that talk about these things?
Oren: I define my market as increased efficiency in urban areas. And if metering is in this scope, so it can be part of my solution. But, again, you know, I'm not trying to develop good technology because it's good technology. I'm trying to develop or be interested in technology that can be implemented in our solution to increase efficiency to the urban water area. But again, so I'm interested in those areas. And it's an invitation for cooperation. I don't assume that Miya will stay with just its six companies next year.
PennWell: As you look out to the future, what are your targets for growth? Say, next year, you might say Miya will have acquired two more companies, have a staffing level of 750 employees, and has a revenue or turnover of such-and-such?
Oren: First of all, we have every intention of being a big company. As a private venture, we are not sharing yet our revenues. But there's no question that the vision of Ms. Aronson is that she would like to create a significant influence. And if we would be a small player... It's very nice to listen to her, because from her point of view, if competition comes, it's great. Meaning... we improve the situation of everyone. We bring more water back to the system. We would like to emphasize that we think the world on its way to move from the perception of you need more, you build more, so you need more. That's inefficiency. Maybe it's a slogan, but it's not a slogan. We execute.
PennWell: What was it that brought Shari to this concept?
Oren: That's a question that, while I'm not her spokesman, I know. She really believes that she can leverage her money to do economic initiatives that not only create money but create good. Her vision is secure in this. In our first discussion, she told me, "I really don't have interest so much in value as in solutions." So I told her, "And if I come to you with technology to repair pipes..." She said, "Do you know how to make money from it?" I said, "We not only will make money from it, but we will return more water to the world." So, it's a nice value. And it's a nice vision. And she really has supported it.
PennWell: I would imagine that from a three-year project, as you mentioned earlier, the savings are quite considerable. Could you expand on that?
Oren: We assume that if we would save 50% of the water lost in the world, we can supply water to over 130 million people. The daily real water loss is equivalent to 36,000 Olympic-size pools per day.
PennWell: You also said you have no competition...
Oren: No, I said we're looking for cooperation and I don't see any competition.
PennWell: Once the business model is spotted by other people out there in the sector, do you think there are companies out there that are maybe at 20% of where you are and think that if they join up with someone else that they could become active competitors to you?
Oren: I am not naïve. You know the clock is running. But, again, based on our vision, I assume that we will create value in this. I assume that we will not stop in this. We will continue to improve. And I'm sure that we cannot solve all the water problems in the world. At the end of the day, it's a good plan. And if we can save more water for the world, then that's all the better.
PennWell: I would imagine that since this is such a broad market area, that even if another company emerged -- say a metering company allied with a pressure management or other company -- it would still mean that there's only at that point, according to your theory, two complete market competitors to share the business available. There's plenty of room to play.
Oren: I don't want to, but it would be almost ridiculous to say, "I really welcome everyone to compete with me." I would not. But I believe in cooperation...
PennWell: That sounds like a good place to wrap this up. Thanks so much for your time.
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CONTACT:
Booky Oren, President & CEO
Miya S.a.r.l. - An Arison Group Company
46A, Avenue J.F Kennedy
L-1855 Luxembourg
Tel: +352-42-717-1274
Fax: +352-42-1961
23 Shaul Hamelech Blvd.
Tel Aviv 64367 Israel
Tel: +972 3 777 9800
Fax: +972 3 777 9801
Email: [email protected]
Web: www.miya-water.com
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