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Transforming the economics of pipeline replacement (and more) — Zilper Trenchless’ leap forward in trenchless technology
Daniel Zillante is the CEO and Co-Founder of Zilper Trenchless, a Cambridge-based trenchless technology startup that specializes in creating cost-efficient equipment for infrastructure projects. From winning the MIT DesignX Demo Day competition to taking home more than $425k from the Rice Business Plan Competition, Zilper Trenchless is quickly gaining momentum. Daniel sat down with us this week to talk about his transition from engineering to entrepreneurship, what makes a good team, and why trenchless technology should be on your radar.
Tell us a little about yourself and what led you to found Zilper Trenchless?
I was born and raised in Venezuela, surrounded by a family of entrepreneurs that inspired me to pursue my own entrepreneurial journey.
At the age of 20, while I was getting my engineering degree, I started my first business, a company that imported products from China to be sold online. Since then, I’ve always been passionate about creating companies that add value to customers, employees, and society. However, I knew that if I really wanted to have an impact on people’s lives, I needed to learn more about business and technology in a place where entrepreneurship and innovation were encouraged. To achieve this goal, I moved to Cambridge, MA in 2017 to complete an MBA with a focus on Entrepreneurship and Innovation at MIT Sloan.
How did Zilper Trenchless start? Well, it started over a conversation with my brother, Roberto, during Christmas dinner in 2017. He had been working in the trenchless industry for over 7 years and realized that the market desperately needed an efficient technology to reduce the cost of underground piping projects. Moreover, he already had in mind how to create that technology. The more we discussed the idea, the more I realized the potential it had. I knew that by partnering with him to develop and bring this new technology to market, we could help deliver water and sanitation to the people who need it the most in the world.
What problem do you solve for your customer?
While laying pipes underground may seem like a very straight-forward process, in reality, it poses many important regulatory, environmental and engineering challenges that make the process costly, time-consuming and disruptive for contractors and cities. What most people are unaware of is that most of the challenges and 70% of the cost of those projects are directly related to the excavation process required to install a pipeline.
Even though current trenchless technologies reduce the excavation needed for an underground piping project, the high cost and lack of versatility of these machines discourage most pipeline contractors from using them. That is the problem Zilper Trenchless is trying to solve — we are bringing versatility and savings to a market that is craving a cost-efficient solution.
What is the long term impact in water you want to have with Zilper Trenchless?
The world has an immense water infrastructure challenge to solve. In developing countries, many people still do not have access to a clean water source or reliable sanitation. In developed countries, such as the United States, up to 18% of fresh water is wasted due to leaks in our crumbling water piping systems. What most people have not realized is that both problems share a common cause: the high cost of pipeline projects.
We want to develop technology and business models that allow us to be a game-changer for the water infrastructure industry. As we scale, we believe that we can significantly reduce the cost of water pipeline infrastructure worldwide, allowing developed countries to renovate their infrastructure and developing countries to install the new pipelines that they desperately need.
What’s the biggest thing you have learned as a founder?
Entrepreneurship is a team sport. Having a great team with complementary skills, a common passion, and values is the most important part of building a company. I truly believe the reason we will be successful and have a great company is because of our strong, passionate team. I learned that, as a founder, your main priority should be to find the right people to work with.
I was lucky to find the perfect co-founder in my brother. Besides having great technical skills and industry expertise that complimented my business skills, he shares the same values and vision for the company as I do. Furthermore, our work ethic and trust in each other’s skills allow us to move quickly when faced with challenging situations.
However, the right team goes beyond just the founding team. We were also lucky to find a great team of professors, lawyers, advisors, employees, interns, and customers who helped us every step of the way. Without them, none of this would have been possible. Any success that we might have, we will owe to them.
What is most misunderstood about the trenchless market?
Even though the trenchless market is considered “hot” because of its fast growth, most people stay away because of the belief that it is highly capital-intensive. However, that is a misconception. After a deep dive into our cost structure and cash flow projections, most investors realize that there are no two companies in this sector with the same capital requirements. In our case, we have to be very capital efficient, but this misconception has stopped investors from looking at us seriously in the first place.
We rely on our customers, unit economics, and business model to fuel our developments and growth. For example, in our beachhead market, customers pay 70% upfront for the equipment. Given our margins, that is more than enough money to manufacture our technology without having to spend our own capital. In fact, that has allowed us to bootstrap the company all the way to this point, where we are already post-revenue with a commercial prototype.
Additionally, our industry offers a unique opportunity to minimize dilution by accessing unique financial tools, such as debt backed by the company’s assets, a resource that is not available for most startups.
Sum up your IH2O experience so far in 3 words.
Connections, Support, Water