Erin Rothman is on a mission to create the Google Maps of sewers using sensors to produce real-time alerts of stormwater. The CEO of StormSensor talks to Tom Freyberg about recent investment challenges and why the pandemic lockdown enabled her team to refine the technology.
Entrepreneurial life is not for everyone. The peaks of success are often matched and outweighed by the troughs of potentially being on the brink of losing everything.
Erin Rothman can relate to this. In the middle of March, as the pandemic was spreading like wildfire across the world, causing countries to close borders, she faced a dilemma.
The CEO of US-start up StormSensor was in the middle of raising a Series A investment round of $4.5 million. Anticipating closing the investment on March 23rd, the US stock market crashed, resulting in all the investors pulling out in the space of a week.
“We had no plan, and I couldn’t make payroll,” she recalls. “I had an offer of an acqui-hire, where they take our company, and everyone gets to keep their jobs.”
But this wasn’t Erin’s style, nor was it the path she wanted to take. Instead, she did what all great entrepreneurs do: she got to work.
After securing one million dollars from the lead investor, the American Family Institute, every day for two weeks she spent 15 hours on the phone to 20 different investors– all of which she hadn’t met before. And this was during the lockdown, with only video conferencing available, rather than face-to-face meetings.
“Payroll was due the first week of April, and I couldn’t make it,” she adds. “I put every last bit of my savings into our company.”
After furloughing some members of the team “because I couldn’t afford to pay them”, the CEO then had a bit of good fortune.
“Four weeks after everything fell apart, we did a final close for the full two million dollars.”
“Four weeks after everything fell apart, we did a final close for the full two million dollars. Everyone got paid, and I didn’t lose anyone.”
Overcoming the challenge and recognising the help she received at the 11th hour, Erin acknowledges the “extraordinary group of investors and people” that made it happen, including Techstars, Sofia Fund and in particular, Imagine H2O.
It’s often said that during a pandemic, or time of high stress, people show their true colours. Indeed, it’s a litmus test of a company’s and leaders’ morality.
So does the CEO hold any animosity against the original investors?
“I don’t blame the investors who walked away because they had their own portfolios that they had to take care of,” she remembers.
“They just reinvested the money into their existing teams, which makes complete sense. I totally understand and didn’t have time to hold it against them. I could only think about saving my company; there was no other choice.”
After celebrating with her team via virtual drinks in April, Erin had to face the reality of a drastically different market.
The seed for StormSensor began in 2010. An MS graduate in Natural Resources/Wetland Ecology from the Ohio State University, Erin became a stormwater consultant. She and the team were hired to work on the Lower Duwamish Waterway in Seattle.
“All of the property owners and facility operators along the river had to prove that their stormwater runoff was compliant with state standards,” she recalls. “And if they couldn’t, then they were considered a source of the pollution, so would have to pay for part of a multi-billion dollar clean-up.”
However, her company began losing money on the projects. “It didn’t make sense – all of the teams were so busy working for big companies,” she recalls.
And so Erin investigated. After talking to field technicians, she found out that every time it rained at the office, they went to “go sample” at their sites.
“Just because it was raining here, it doesn’t mean it was raining there, so on average, they’re going out four times before they can actually collect a sample and bill their time,” explains the CEO.
“And I said, “That’s the stupidest thing I’ve ever heard. Why don’t we just have a rain gauge that texts us when it rains?” And they said, “Why don’t you invent that?” And I said, “I will. I’m going to call it StormSensor.”
Lacking software and hardware experience, StormSensor remained an idea for four years until 2014 – a time which Erin jokes was her “34-year old mid-life crisis…actually, a gap year sounds better”.
After founding her own consulting company, SLR Consulting, it was while in San Francisco where “everyone said they were in a start-up, so I did too”.
“It was then that I realised I wanted to create something,” she says. “I’ve always been frustrated with environmental consulting; it had become commoditised.”
She switched focus to industrial and construction compliance. “In my head, StormSensor was a sensor that monitors temperature, flow, pH, turbidity, and then that sensor transmits its data to an app that just summarises the data and can produce reports.”
However, it was only when she started talking to city officials that they said they don’t really need all of that data.
Instead, city officials told her they needed to understand how much water was flowing through their systems, which, although it “boggled her mind”, Erin saw an opportunity.
Deciding to take away the chemical parameter measurement meant the sensors wouldn’t need to be maintained, in the process reduced battery life.
“It’s like metering the last unmetered utility.”
“That’s where the notion of the network came up, and then looking at capacity issues and flow is where the “Google with traffic maps for sewers” idea started…It’s like metering the last unmetered utility.”
rest, as they say, is history.
Fast forward to today and StormSensor is currently being used by nine water utilities, with four more recently signed up to the system: deploying in Boston, Norfolk, Virginia, Oakland Park, Florida, and then
Boulder later this year.
The company’s “Terrapin network” allows for sewershed-wide deployment, including real-time alerts and long-term tracking.
Partners include cities, counties, utility authorities, non-profits and environmental consultants.
Erin has plans to take the company outside of the US but all in good time, with “the next stage to take us out of the installation process”.
However, with the target to raise $4.5 million and only raising $2 million amidst a pandemic, she admits “that changed things”.
Added to which all of the company’s inbound leads disappeared, as well as a number of deployments postponed because city buildings were closed, and access limited.
With contracts and business getting pushed, it allowed Erin and her team to focus on the technology and “nailing our product”.
“We’ve made some pretty significant improvements to the robustness and the ease of installation of our sensors,” she adds. “We’ve done a tonne of work, and we’re releasing a pretty massive redesign of our software in September.”
Other improvements include improving the “robustness of the backend and our database”, as well as how the frontend inter-operates with that database.
“We’ve also done much work on analytics with our existing systems,” continues the CEO. “And we’ve made what we think is a bit of a discovery in the data and how storm systems are modelled relative to how they actually operate.”
“We think we may have found the hidden cause of flooding in these systems, so we have a potentially great opportunity to actually evaluate whether that’s true. If it is, then it can have some pretty significant implications on storm system design and sizing.”
Despite uncertainty in the economy, Erin is optimistic about the future of the company.
“Climate change is happening,” she says, matter of factly. “We can’t stop it. There need to be more companies that are working with cities to adapt to what’s already happening and what’s going to continue to happen. And that’s where we come into the equation.”