Israel's Water Ninja

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Israel's Water Ninja

TakaDu, the Water Ninja Detecting Leaks, Leading Innovation

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," catches a droplet on his palm. "Literally every drop counts," he says. "This is the modern-day Gihon."

Gihon was the ancient, intermittent spring that made human settlement possible in Jerusalem circa 700 B.C. 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 90 miles 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.

Like most of its neighbors, 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 nondrought years. It even has a water surplus, a portion of which (about 150million cubic meters 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 meters 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 percent 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 percent of the water they distribute in their networks. By comparison, Jerusalem's utility—Hagihon, Peleg's first customer in 2009—wastes less than 10 percent of its supply, thanks in large part to TaKaDu.

Over the past five years, venture capital firms and companies including3M(MMM)andABB(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 40,000miles of water pipelines. Peleg won't disclose TaKaDu's revenue but says it's grown more than 50 percent annually over the past two years.

TaKaDu's software is designed, as Peleg describes it, "to slice and dice and analyze 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 analyze 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 colors, 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, toMicrosoft(MSFT), less than two years after he founded it. (A leading Israeli newspaper reported a rumored 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 firstApple(AAPL)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 Israel Defense Forces' 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 analyzes 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 specializing 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 program. "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 checks 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 35employees 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 organizations 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 behavior" 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.

Source: BusinessWeek

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