The Hidden Climate Opportunity Sitting in Your Basement

Your water heater is often the most ignored piece of infrastructure in your home. Until it ruins your morning. It also happens to be one of the biggest energy hogs you own. In many homes, your hot water can account for around 20%, yes, 20% of total energy use and can pull more electricity over the year than get this an electric car. What's surprising is how little the core technology has evolved with many systems still rooted in mid-century design. Nobody likes running out of hot water, right? Like, nobody thinks about their water heater, nobody talks about their water heater until they run out of hot water and then it's the most important thing in the world. That's exactly where Luke's story starts. Luke grew up in New Mexico and he was a middle child of five boys, so hot water was a competitive sport. Later in life, with kids and family, he finally had that unlimited hot water with a tankless gas setup and a new question showed up, which is similar to my story as well. How do you keep the comfort without locking your home into fossil fuels? And that's kind of the trap a lot of people hit in electrification. The options usually feel like trade-offs, convenience versus cost, sustainability versus performance, good enough, tech versus a messy installation experience. So in this episode, I get to sit down with Luke Winston Almazar, he is a CEO and co-founder of reservoir. We get to talk about what happens when you treat a water heater like a smart energy system instead of a simple appliance that you never see and forget and put in the corner off in the storage room. And I can talk to my watch today, right, like I can't have a conversation with my watch and yet I have something in my house that uses 20% of my energy and it's just it like completely lacks intelligence. I find that insane. Because reservoirs bet is quite simple, make the most sustainable choice feel like the obvious upgrade. A heat pump water heater that dramatically cuts energy use learns your household patterns. I really wish I had one of these. And adds quality of life features people actually care about. You need instant hot water, smarter control, and protection against real world problems that homeowners face. Welcome to the capitalist hippie. The podcast where we challenge the old rules of business to build something better. I'm Mark Opimentel, marketing expert, entrepreneur, and lover of bold, sustainable ideas. After a week, we dive into data backed insights, groundbreaking ideas, and real world strategies that help you outthink and outmaneuver the status quo. And today we're diving into the overlooked box in your basement. And why upgrading it might be one of the most practical moves in home electrification. Let's get into it. Luke, welcome to the show. I'm excited to talk to you today. Yeah, likewise. Thank you. Thank you for having me. Thank you for watching Water Heaters. And so if I'm thinking about this from just my own personal experience, we have a few different options in the market. You kind of get sold on the classic water heater electric thing that you see in most homes. They don't last a long time. They often don't heat the water. You sit there and kind of wait. And then you have your gas options that are instant. But that seems to be a popular choice, but you're building something very different. So what's the like elevator pitch like, what are you building and what is reservoir? So I guess just really quick to introduce myself. So I'm the CEO and co-founder of reservoir based here in Boston. I have two amazing co-founders that we started the company with last year. So Gabe and Jake, so we're VC backed, we're based in Boston. And the basic idea for us is like, we think it's too hard and often too expensive to go electric and be sustainable. And often there's too many trade-offs to actually stop a bunch of people from making this sustainable choice. They're definitely people that will do it. In the hot water space, I think nobody likes running out of hot water. Nobody thinks about their water heater, nobody talks about their water heater until they run out of hot water. And then it's the most important thing in the world. I would still back up and just say like, our first product is the world's smartest water heater, but at our core reservoir is a heat and water company. Our goal is to be the most affordable, the most reliable, and the most comfortable way of getting and managing heat and water in your home. And by doing that, we want to make sustainability more awesome. And so our first product, which we recently introduced is called Reservoir, also, it's the world's smartest water heater. We give homeowners quite a few luxury features, so we could talk more about that, but we can get 150 gallons of hot water out of a 50 gallon tank. We can give you instant hot water when you turn on your shower, so it just comes right out so you don't waste water as it's going down the drain. But then it can also operate at ultra-high efficiency so we can actually save you a bunch of money. And so you get amazing luxury features, and you save money, and it's easy to be sustainable. But the other side of things with that is we also have an intelligent system, so the reservoir can double as a grid-connected thermal battery, because as intelligence, it has connectivity, but it also has hardware that no other system has. Alright, I really love this. I think this is a profound shift in how we think about home appliances. When we're moving from simple, single-purpose devices to intelligent, multi-function systems, your water heater isn't just heating water anymore. It's becoming a thermal battery, a grid resource, and a smart home hub. This is more than product innovation. I think it's category redefinition. And so I guess the final thing we're doing different, so we have an amazing product, but one of the things I've definitely found in this space, it's not just the product that matters. It's how hard it is to actually get the product. And so one thing we're doing quite a bit different is we're bringing reservoir directly to homeowners ourselves. Maybe you think it should be easier to upgrade your hot water system than getting an oil change, and so we're starting by doing that ourselves. And so when I bring up the options, are you trying to solve the water heater entirely? Or is this like first going after the, you have an electric water heater already? Or are you going after, like this is a better option versus the gas? And like myself, I'm spending lots of time in climate and sustainability. And I remember renovating our house and the plumber conversation of being like, well, if you want water on demand, we have natural grass already to your house. This is the best option. And I'm kind of like looking at my partner and I'm like, well, I guess that's what we're going to go with. And we chose to go with that because it didn't feel like I'd have to kind of give up one option for the sake of the other. And that's often like this kind of big kind of divide with sustainability is like, do you have to give up something like you mentioned, you know, there's hot water right on demand. And it seems like that's the electricity issue. So like, how are you tackling like that kind of core problem of, you know, from the consumer side of things? So it's interesting talking about like just what's out there on the market. So basically, the way to think about it is there's, there's 120 million homes across the country and almost every single one of them has a dedicated water heater. Only half have an electric resistance water heater and roughly half have gas or oil or propane mainly mainly like natural gas. So it is an absolute no brainer to upgrade to our kind of system if you have an electric resistance. So like in the Boston area alone, you can save with our system $800 or more a year by switching from it. I guess one way I like to put it is is if I meet a friend who has an electric resistance water heater in the Northeast, I need to do them a favor and help them get a reservoir because I can save them a bunch of money. I like to say friends don't let friends burn money with the electric resistance. On the gas side of things, I mean, so that's half the country, right? And that's like, even in Massachusetts, there's a million homes with electric resistance water heaters, other places, there's like a ton. The gas side of things, it's really interesting. I guess this kind of gets to like a personal story. So like, I grew up as the middle of five boys in New Mexico. And we're all tight-naged and everything, but I'm the middle child with a 50-gallon gas tank water heater. And I can't tell you how many short cold showers I had. And so like, I'm obsessed with hot water that more than most people because we had like, you know, short, short showers and everything. So my first apartment that I actually bought, one of the reasons I got excited about it was because it had a tankless gas water heater, right? And I was just like, this is a godsend, I'm not going to run out of hot water and everything like that. So I didn't want to give it up, but then, you know, fast forward to today and I have, I have my own kids. And honestly, I've, I've wanted to be sustainable for like a very long time and so I wanted to walk the walk. I wanted to stop burning gas in my house, stop burning gas for my kids, like, live in breathe. And, you know, let's not even talk about fears of like carbon monoxide when you have little kids. But I also, you know, I love long-hot showers and tankless gas made sure I didn't run out of hot water. And so I started trying to find the electric option that could replace my tankless gas water heater and I just couldn't find it, right? Like, I was overwhelmed by options on the market. I was underwhelmed by, honestly, the experience of trying to hunt for it, like trying to figure out what's a better product, but then also just trying to find a contractor that could do it great. And so, the reason we started the company was so that we can make a water heater that is just like no trade-offs, right? Like, it's just as good as a tankless gas water heater and yet it's electric and it can actually save you money. But then we also believe very strongly, like we, at least in the beginning, we have to make sure that the experience of upgrading is super easy and it's got to be better than everything on the market. It's got to be easier to get than getting an oil change, right? Yeah. And it's a good point as well because I did the same thing as what you said is I did all the research and I talked to the plumbers and talked to another plumber and asked like, "Where, what are the electric options?" She just said, "You can't, you can't get it. Just those options aren't there." So let's talk about like the electric heater and why it costs so much money because my understanding is they're pretty cheap, right? Like an electric water heater, you know, I don't know what they cost in the US, but like just say in Canada, they're anywhere between like $600 Canadian, which is like $400 US to like $800 Canadian. So pretty inexpensive. I think they last like five to six years and they just seem like they're the most kind of common, common option. Why is your product saved so much money, comparatively to this, you know, obviously you, I'm assuming you're going to have to pay more money up front, but why does it so much more efficient than the electric version right now? One of the great things about water is it holds a lot of heat. One of the bad things about water is it holds a lot of heat. And so you actually have to use a lot of energy to heat it up, right? To the typical electric resistance water heater, you're effectively using the technology of a toaster, right? So you're passing through a coil so that you can heat it up and you transfer that into water. The maximum efficiency that you can get with that is 100% probably the best that you see on the market is probably like 95%, which means 95% of the energy that you use with electricity goes into the water. There is a wonder of thermodynamics that's very exciting that a lot of people have talked about. It's called a heat pump. A heat pump can actually operate for even higher times the efficiency of a water heater of an electric resistance water heater. And so we can dramatically improve on the energy usage. My mind was kind of buzzing listening to this. This is the kind of efficiency gap that creates massive business opportunities. We're talking about a 400% improvement over existing technology that's sitting in half of American homes. Let that sink in. When you find this level of inefficiency in a universal product category, you're not looking at incremental improvement, you're looking at market transformation. That's the difference between a feature and a company. Because a heat pump, it doesn't create heat. It just moves heat around so it'll take heat from the surroundings and then actually put it in the water. And so at that most basic level, we use so much less energy than electric resistance water heater. The reason it's better than a lot of systems out there is because the downside of the heat pump is that the heat pump is really slow at heating the water. You have other systems that might integrate a heat pump. I like to heat a 50 gallon tank of water. It can take more than 5 hours, so if you suddenly use a bunch of your hot water, you don't want to wait 5 hours for it to get it. Our system is equipped with an adaptive computer using what we call thermal intelligence. It uses machine learning to actually learn your behavior. It'll say, "I know when Marco showers, he's an early riser, so he showers at 6 in the morning every day, so I'm going to put in an advance, use that heat pump, which is the most efficient way to heat water, so I can save you a bunch of energy." Sure, you can buy an electric resistance water heater at Home Depot for hundreds of dollars. But in the Boston area, for example, with our electric rates here, people are spending 1,000, 1,000, 1,500 dollars a year just to heat a tank of water. To put it in perspective, one of the reasons I started the company was because I realized that I was using more energy to heat my water than it takes to drive my electric car. It's an insane amount of energy. Most people don't even realize how much energy you're using to heat your water. If you go down from a first principles perspective, a lot of people are like, "Okay, space heating, air conditioning, something else, maybe refrigeration cooking, there's actually space heating, and then water heating." Water heating is 20% of home energy in the United States. Water heaters, the electric resistance ones you're talking about, the gas ones we've talked about, they're operating on like 1950s, 1960s technology, they're just very little intelligence in them. And I can talk to my watch today, right? I can have a conversation with my watch, and yet I have something in my house that uses 20% of my energy, and it's just, it completely lacks intelligence. I find that insane. Yeah, and you're so right about people's habits in the home, right? Who showers at what time, and when do you put the kids to bed at this time, and like, that is a cyclical nature to that, and people's homes as well, that obviously with AI and machine learning, you can learn about. The one thing I'm slightly still confused about is like, when I think about heat pump, I think about like a heat pump that's outside, that's this big fan, that's heating, and cooling my house, how does that make its way into a heat into a water heater? Yeah, so I mean, you can have different sizes of heat pumps, so I guess if I can describe our products, so we integrate a variety of different devices into a form factor that looks like a standard water heater. It's a direct replacement for almost any water heater out there, but it's better to characterize it as a hot water system, because we actually integrate three core elements, so like you have our heating elements, which has a heat pump in addition to three other heating elements. We have industrial controls, so we have a series of pumps and actuators, so we can actually do more in your house than just heat your water, and I'm happy to tell you about that kind of stuff as well, but then we also have a computer, and so we have a heat pump stacked on top of the tank of water, and so what the heat pump does is it actually, like what's really exciting like in the summer, it can help cool your space, and it dumps that the heat that it sucks out of your space into the water, and so you get that whole benefit. It can also, like if it's in an unfinished basement, and it can actually act as a dehumidifier, I know plenty of people that just have dehumidifiers just running in their basements and everything, so this is kind of an elegant way of getting some synergies in your house, like in the summer of cooling your house and dumping that heat in the water, pulling that, pulling that moisture out of the air, and doing things that you'd actually want anyway. So this is like a, I believe, a five to ten billion dollar market in North America. Everything you just said, incredibly compelling, like I completely get it, I understand it, but how did you guys get started? Like how did you go from like, we need to fix this issue, how did you, how did you, how did you fund this, and then how did you kind of first kind of build this, or did you partner with a company to build this, like how, how did you kind of start going about that process? I had previously helped build a company called the FormLab, so it's one of the, it's the global leader in professional grade 3D printing, I was on the founding team of that company, we went from pre revenue to several hundred million dollars in revenue, I was the chief business officer there, spent about 11 years there, and had basically a lot of experience building a big smart device company. From like a first principles perspective, I wanted to do something in the, in the built environment, I wanted to do something that impacts sustainability, energy, and things like that, but I also wanted something that's like rapidly scalable, and actually could build a really big business, like you mentioned, my estimate is that this market's actually about 15 billion dollars once you start including the installations and things like that. I love this way of picking the problem and water heaters and reservoir might have just figured out this trifecta. The best climate tech opportunities sit at this intersection of three things, significant carbon impact, operational simplicity, and business model clarity. And I think water heaters hit all three, they're super energy intensive, they're relatively simple to replace, and they have a clear path to revenue. If you're evaluating climate opportunities, I think this is the trifecta that you should be looking for. I got very excited about the idea that one hot water is a big use of energy, but that it's also relatively fast to swap out, right? And so thinking about the ways you can impact your house, like your HVAC system definitely can actually, it's a bigger use of energy, but if you want to start attacking HVAC and replacing HVAC system, you're talking like open heart surgery on the house, whereas with a water heater, you can replace it in a morning, you can replace it in the afternoon, and if you control the hardware, you can actually make it even simpler to install. So I left form labs with the intent of starting a smart water heater company, actually networked to find my first co-founder, Gabe, who he actually, he worked at Apple, he helped build the iPhone 6. He was on the iPhone 6 supply chain team, but then he went to Y Combinator and founded a company in the in the hot water space called Nebia, they got funding from Tim Cook, they eventually sold it to one of more Cubans companies, he basically spent a decade building plumbing technology. And then we found our third co-founder, Jake, who is just like this amazing full stack engineer, he's just as good as anybody I know at mechanical engineering, just as good as anybody I know at electrical engineering, just as good as anybody I know at software engineering. And so we've built hardware companies before, we've combined, we've literally shipped like millions of products, right? And so starting from right there, it's like how do you get it done? One, we know that you need to keep it focused and straightforward, and so that's why we decided to focus on water heating instead of something more broad, but we also know that it's important to work with partnerships. And so we found one of the largest heat pump manufacturers in the world and decided to partner with them to co-design the product and tap into existing supply chains. And so we're not inventing cold fusion in a bottle, we're using some technologies that are proven, but we're integrating them in an elegant way. But it allows us to tap into proven supply chains where we can actually scale very rapidly and very cost-efficiently. I think better than almost like most hardware startups out there, we've been moving very fast and very efficiently. So last year we started the company, we had an amazing investor, it lead our round. So that was actually Eric Paley of Founder Collective. And so we raised a seed round, we had participation from MCJ, 186 Ventures, and a variety of other amazing advisors. So like Drew Scott of the Property Brothers is one of our advisors and investors. He's also Canadian and also other people like Alex Laskies, one of the co-founders of rewiring America. And so bringing together like an awesome coalition of people who have kind of, you know, they've seen a couple of rodeos before, you know, you can build the company relatively efficiently. And you chose to go B2C, how do we make this change? And I think that one point that a water heater can be changed out pretty quickly, comparatively to heating. Heating is a bigger decision. Like you said, it's also, you know, the new technology is amazing for new builds because you get to start from scratch. But when you're dealing with an older house or retrofits and stuff, it is a bit of a pain. And like you said, water heaters are pretty straightforward to do that. So why go B2C? Obviously you guys have tons of experience being able to ship product to consumers. How, what was kind of that decision versus saying like, ah, you know what? Well, just we're going to be a supplier. We got, you know, there's thousands of plumbers across North America. They're installing heat water, you know, water heaters already. Why don't we just get them to do that? I guess a couple of reasons. One, we wanted to solve two problems. We want better products on the market. But it also has to be super easy to get. I mean, you and I already talked about this experience. Like it's super confusing, just searching around like one, just thinking about a water heater that's better. But then two, who's a great plumber or who's a great person to be able to do this? And so we just want to make it bulletproof easy. There are lots of ways to go to market here. B2B, B2C, B2B2C. This is kind of the underrated part of hardware. Distribution and install are part of the product. At the path to adoption is confusing, slower and consistent, even the best tech loses. Owning the customer experience means you can remove the friction, build trust, and make a new category feel obvious, especially in a space as traditional as plumbing. Now, this might be amazing for the beginning and really important to understand all these complexities at the start. But being open to different go-to-market strategies as your product evolves is also an important note to make. It's not to say we won't work with third parties eventually, but we want that experience to be just amazing. The other side of things is like, particularly with new technology, we've seen like a lot of friction in the market when other players have stumbled when there's reliability issues with other products that have come to the market. And they actually get a lot of resistance from existing contractors, right? Like so they, the existing contractors are like, no, I want what's tried and true. I don't want to have a bunch of service calls. I don't want to do all this kind of stuff. And so there's definitely resistance. And so one another reason we're doing it is because we can prove that this is an amazing experience. And then the final reason is, if something goes wrong, there's always something that goes wrong with hardware. Every single company in the world has, that's why they have tech support teams, right? When something goes wrong, a third party is not going to back it up like we will. Like we're invested in such a such a different way. And then if we're really talking about the business side of things, another stat that most people don't realize is that installing a water heater is the most profitable thing that a plumber does. And so it's also, it's also a business opportunity. So in that scenario, and we've had, we've had other home service options as well. And actually one, I think that's in the Boston area, was dandelion energy that doing geothermal. They do that as well. Like they, they come to the home, they quote you, they install it, they work with third parties to do that, but they take ownership of the whole process. So is that the strategy there as well? Is it to higher plumbers that are going to be reservoir plumbers? Or is it going to be kind of contracted out to plumbers on scale like that? Yeah. Yeah. So as far as I understand with dandelion, what I understand is they started out vertically integrated and then realized like due to the complexity of their kind of operation that made a lot of sense for them to work with third parties, now you're like rolling a truck for geothermal installs is is like a whole different world of complexity than then installing a water heater. So we're like not even on the same planet, right? The, the idea with us, so we've already formed a plumbing company in Massachusetts. I've already hired plumbers. So we're already getting going. But like if you think about it, like you can install hundreds and hundreds of water heater, it can install 1000s water heaters with two trucks and a couple guys, right? Like it's, it's, it's, it's a couple hours to install these things. And so from an operational standpoint, you can be amazingly efficient. On sometimes get we absolutely see a variety of different partnerships in, you know, like we're talking with some developers, for example, where they have like a bigger kind of operation, they already have their go to plumbing contractor and it doesn't make a lot of sense to then involve yet another third party in that. And that's where like our direct install experience is just kind of amazing for helping getting their guys up to speed. But we've actually simplified the install. Like we have, we have four connections to the house. We have hot water, cold water, power, and then a condensate line, right? We can install ours faster than a typical water heater. The other side of things though is we were direct to consumers, as far as the install goes. But we see huge opportunity for collaboration with, well, honestly, two core entities, one is utilities. And then the other one is insurance companies. One of the pieces that you and I have not talked about as much is like we actually have some technology in our system where we can, we can detect if your pipes are going to freeze. I mean, you're up in the north. So, so maybe this is an issue for you as well. But we can actually sample your cold water, predictive your pipes are going to freeze, but then we can actually pump warm water into your pipes so they don't freeze. And so 24% of home insurance claims are water damage. And so like insurance companies, there's already incentives for preventing water damage. On the other side of things, utility companies are extremely excited about creating more capacity. There's a couple ways of creating more capacity. One is having more efficient devices. And then the other is actually using smart devices to shift loads. Well, I think that's when you think about B2C, I think first off, it's hard, it's a little bit of a harder work. You got to roll up your CV and get and actually get the work done. But as a company, you get to get that feedback and that closed loop system with your customers, which is obviously incredibly valuable. But then also identifying these kind of key partners in, you know, an example in Alberta, which is a province next to us right now, they get hail and they get these massive hail storm. So the insurance companies formed this group where all the insurance companies put money in and were supporting some of the work to depress clouds so that the hail is smaller because it's so expensive. So you know, identifying this kind of insurance market is obviously makes a ton of sense. So, and that was my thought. I was like, I'm assuming this water heater needs to be connected to either hardwired to internet or Bluetooth or Wi-Fi, I'm guessing. Like what's that part of the technology? Yeah, so it's Wi-Fi connected. So we actually have an adaptive computer built into the system. This is also another reason we in the beginning want to control the install experiences. We can help our customers just stay connected more. This matters for the customer. So like when we're installing, we can actually like show you the app, show you how you can click a button that says warm my shower, help make sure you're actually connected. But then when you start thinking about like something we haven't talked about as much, like utility partnerships, using smart connected devices for the smart grid, they don't matter if they're not connected, right? And so this is super, so I think there's the hardware, like can it connect at all, but then are you doing what it takes to actually connect it? And so when you get these customers, let's think about the utility side, is this kind of a combination between like are they sending you leads because they're like hey in Boston, here's an option that's going to save you a bunch of money. And are they kind of helping you promote it as a partner? I guess how are you getting your leads when you think about it? That's my world. Lead generation and figuring out how to get customers in the marketing side of things, like I'm compelled, I want one, but like how are you right now kind of getting your leads and is that through partnerships, is that through just direct kind of marketing and kind of cold calling in the area? Like how do you do it? There's quite a bit of all of the above on the utility side of things. There's already incentives in quite a few places. So we're based in Massachusetts, we're rolling out Massachusetts first. There's a mass-aven incentives that give 750 bucks off products like ours. And so there's portals where you can actually see it. The really interesting thing, though, is what's been well established in like the smart thermostat side of things, is utilities encourage smart thermostat so they can do what's called demand response. And that's where they can actually change the temperature of your thermostat so they can reduce load at times where there's like a lot of electricity demand. The problem with that with like a smart thermostat, like a nest, is that you actually change the temperature of someone's house. And so it saves the utility like a little bit of energy, but then it actually changes the temperature of your house. You can also do that with a smart connected water heater. You can actually shift when a reservoir heats up. And the homeowner doesn't feel that at all, right? Like you can heat up your water at two in the morning, and still get your 6am shower or 2pm shower or whatever you want it. And so this starts getting exciting for utilities to actually get them in homes, because you know, you have, for the first time in like decades, like in the United States, like utility demand is expected to go up. There's intermittent sources like solar and wind. And then you also have a hyperscale data centers coming online and energy prices are going up. So utilities could build more capacity. They could build more transmission, but they can also get more capacity by reducing energy usage or shifting where it goes. And like a smart water heater actually gives them an interesting opportunity to do that. So that's one of the reasons they have like incentives for this. Yeah, so there, so from a customer standpoint, there's an incentive already in place. And then from the utility, they want to partner with companies like yourself, because this helps them achieve that goal. When it comes to kind of cost for customers, what's what's a unit cost right now? And is that, you know, obviously your startup? So I'm assuming it's going to be more expensive right now with the goal in the future to be more, less expensive. How does that look for for a customer? Our goal is to be the most reliable, affordable, and comfortable way of managing your heat and water. So upfront costs in the Boston area. So we are starting in the Boston area first. And with incentives, it's about $4,000 to get the hardware and the install. That is actually directly competitive with tankless gas water heater installs. That's directly competitive with other heat pump water heater installs. It's not quite as cheap as the electric resistance we were talking about, but you make up for that on the on the fuel side of tanks. But because we're vertically integrated, we actually can be a very, very compelling value proposition for homeowners. We make it super easy. You actually get a ton of extra features. You get that instant hot water, the freeze protection and everything. And it's actually directly price competitive with the tankless gas water heater. And it sounds like based on electricity in the Boston area, the cost savings sounds like potentially, you know, when you think about the Home Depot ones, plus install, it sounds like maybe three to four years and it's paid off, comparatively to one of the cheaper electric options. Yeah. I mean, if you think about it and your water heater just went out in the Boston area and it's an electric resistance one, the fully installed cost once you negotiate with the plumber and once you get it all done, it's like two to three thousand dollars, right? And then you're talking about spending $1,200 a year, I mean, just for a 50 gallon gas electric water heater, right? So if you compare that to us, $4,000 fully installed and then you save on that side, it's a really short payback period. And for the work that you're doing right now, how many homes have had this installed? And what does that look like? Yeah, so we're in the tens of installs now. We're, we're going to line the sides of the hundreds of installs. I mean, the number I always think about is there's 120 million homes that have a water heater. I mean, hot water is required by law. There's a lot of other like smart technologies that are not required by law, but hot water is required by law. Every single home needs it and people will flip tables if they run out of it. And so, you know, we'll get into the hundreds and thousands, but I mean, like there's the market is gigantic. Yeah. Yeah. And how's, when you think about that, and you think about this kind of early stage, but then you think about kind of scaling this and vision over kind of, let's just say the next kind of five years, where do you, where do you want to take reservoir? Oh, we absolutely want to be national. And so this, this all gets back to like the, the relative operational simplicity of installing a water heater. We can actually grow our teams relatively quickly and get into new markets. It obviously depends on density. So like in a very dense area, like Boston metro, there's a lot more installs with, with an area that's a little bit more dispersed. That's where I think partners will be, will be amazingly relevant. But we want to go national. One thing we haven't talked about as much is, it's just like the idea that I've been talking about like the, the smart water heater with, with industrial controls and using that to dynamically manage like a thermal battery. You could do that for home heat as well. Like so, you can think about, like already a bunch of homes use water for, for heating their house. You can actually just have a bigger tank of water with a bigger heat pump and use intelligence. And then you end up managing like a lot more of the energy in your house. And so it's on our road map. Like we want to manage all the water in your house, all the, all the heat in your house. And if we do heating and hot water, you're talking about 60% of home energy across up 20 million homes in the United States. That's just, it's just enormous. And when you say heat, heat the home, are you talking about the kind of the, the systems that you see where like my parents house, for example, they have a system that was, I think in the 80s or the 90s, it's all the, all the, all the water piping kind of underneath the floor. And it, it heats the house that way. Is that what you're talking about when you talk about heating? Well, there's a bunch of different ways to heat with water. In the Northeast, we have a bunch of radiators. We have hydronic heating like the under floor heating and everything. But you, you can use the tank of water to store the heat. And then there's a bunch of different ways to get that heat into your space. That could be through pump in the water around your house. That can also be from, with a water to air heat exchanger, right? And so you could, that into ducted systems. The really cool thing though is like, as I mentioned before, like water holds a tremendous amount of energy, like a 50 gallon tank at 150 degrees Fahrenheit holds almost as much energy as a Tesla power wall. I had a lot of like aha moments in this whole conversation, but I think this is the hidden in plain site moment. We keep talking about the grid like it's only batteries and power plants, but there's already a tank in millions of homes that can store a surprising amount of energy. Add intelligence to existing infrastructure. And if you manage it well, and suddenly a basic household necessity becomes flexible capacity, the grid can actually use. It's, it's an enormous amount of energy, and most of the energy you need in your house is heat, right? And so if you store that heat in water and you manage it intelligently, you can, you can do a lot of really cool things. Like when I think about my bills as well, heating, I have a heat pump in a furnace system, and I've heating is a lot more expensive than cooling. And so with this system potentially cool as well, or is it the heating as well as the hot water? There's definitely ways to do that. That would be the kind of thing, yet we would love to do that. At the industrial scale, like giant tanks of water are already used as thermal batteries to do cooling. So like right here in the Boston area, Harvard has this energy facility in Austin where they have a 1.3 million gallon tank of water that in the summer, they cool down, they arbitrage energy rates, and then they pump that around campus so that they can actually cool, right? And so you're effectively storing cool energy. There's, there's big installations by other companies that do this kind of thing. And so like this is not a new concept. What's new is nobody does it in the single family home, right? Nobody does it at that scale, and it's because it takes like a lot of smart, elegant integration and managing the costs and managing how you actually get it in the house. Yeah, and being able to go direct to consumer right away makes a ton of sense to be able to get all that kind of feedback, to build that kind of relationship with the customer. What's your, what are the things that kind of keep you up in doing this? Because this all sounds very compelling. But what are the, what are the hard challenges that you think that you need to overcome? Rule number one is never let our customers run out of hot water. That is the, you know, like I think everybody has this story of when their water heater failed at the worst possible moment. Thanksgiving is coming up here tomorrow in the, in the United States and unfortunately some people are going to have their water heaters fail. What, what keeps me up is just making sure that doesn't happen and that we have like an awesome, awesome customer experience because as we have that awesome customer experience, talk to anybody in the home service industry, that's what drives your business forward and you get that snowball going or that's what stops it, right? And so the number one priority is safe, uninterrupted delivery of hot water for our homeowners and then building partnerships to help get the word out. When you think about the business side too, funding this, you've gotten a really, really great group of investors. But, you know, when you're building these hot water tanks, you're installing them, you are earning money right away. So how do you think about that kind of vision and scaling across North America? You're obviously going to need money, but, you know, you are also going to be earning revenue. And so like what's the, the way that you look at this as you kind of think about that scale? Is it a kind of a combination between ensuring revenue and profitability is there or is it mostly really kind of just doubled down at all costs on growth and kind of fund this way through similar means? At a core level, we can definitely build a cash flow business where we can grow, you know, as we're profitable. And, you know, it's actually pretty straight line to profitability from where we are right now. The big question ends up being how fast do we want to grow? We want to grow very fast so we can get to those 120 million homes. But if we do it too fast, just because we raised a bunch of EC money, that momentum will stop if we don't provide a great experience and great service. We've seen a bunch of hardware companies that, I mean, I love this in my past life as well, my co-founders as well. If you don't have a great product and a great experience and you expand too fast, it will, it will bite you. And so we, we want to grow fast because we think the climate emergency is, is an emergency and we, we want to get to every home in America. We think our product is, is amazing, but we also need to make sure that it's, it's amazing as, as we expand. So, you know, kind of in summary is like we, we do plan to raise when we can responsibly grow and when we could put that money to work. We spend so much time talking about the future of energy. And meanwhile, one of the biggest opportunities is already sitting in the basement. What I appreciate about reservoirs is that they're not selling sacrifice. It's selling in upgrade. Lower energy use is a smoother daily experience and a system that can actually get smarter over time. And that's the lesson that keeps showing up in climate. Sustainability scales faster when it feels better, not harder. When the new option is the one you choose anyway, because it's more comfortable, more reliable, and it's cheaper to run. Thanks for listening to the capitalist hippie. If you enjoy this episode, share it with someone thinking about home electrification and renovations and we will see you next time.