Colby Manwaring: Why I bought Emagin?
A passion for writing code
The CEO of US software giant, Innovyze, Colby Manwaring talks to Tom Freyberg about the integration with the acquired AI company, Emagin and the pivot into industrial water.
Colby Manwaring is a straight-talking guy. Possessing a serious demeanour, he rattles off answers to tricky interview questions without pausing for thought. He also dodges direct questions about acquisition prices with the dexterity of a media-trained ninja.
There’s no “ums” or “ahs”; just clear, detailed and flint-like answers that you would expect from a polished corporate CEO running a business backed by private equity owners.
Manwaring has a passion for writing code, specialises in computational hydraulics and water resources and says he is proud that he’s still “an engineer deep inside”.
A graduate from Brigham Young University with both a Bachelor and Masters degrees of Science in civil engineering, he realised early on that software was his passion.
After working in software development, implementation and engineering consulting work, he rose through the ranks until becoming the CEO of XP Solutions and finally the boss of Innovyze.
Plugging in AI
It was at the end of 2019 when his US-based global software company, Innovyze, acquired Canadian artificial intelligence (AI) start-up, Emagin, for an undisclosed sum.
At the time, with a single reference case at UK water provider United Utilities, some thought the acquisition was a tad early, not to mention the questions raised over a couple of high-profile staff exits.
Yet, according to the CEO, the Emagin team has now been fully integrated into the company’s Info360 team and is enabling Innovyze to pivot from municipal into the industrial markets with an AI offering.
"The Emagin acquisition was really to allow at Innovyze to leapfrog from a technology point of view to a real-time, cloud-based platform."
“The Emagin acquisition was really to allow Innovyze to leapfrog from a technology point of view to a real-time, cloud-based platform that was already enabled with an AI engine,” Manwaring explains.
“Specifically, an AI engine that had been tuned or built for water, right? Not just a generic AI engine, but one that had been tried, proven and, tested in the water industry so that we had built-in confidence and trust in the solution that Innovyze was bringing to the market.”
Active in nearly 60 countries, the company has built up a reputation as one of the leading data analytics players in the global water market.
Working with multiple water utilities, which have been Innovyze’s main clients, the company is working to “plug in” the Emagin AI software to its portfolio of products.
Maintaining the spark of a start-up
When global corporations acquire start-ups, there is a risk that the latter lose their mojo, their shine or spark.
The hunger, excitement, fear and nimbleness that comes with a company wrestling to expand with limited resources can often get replaced with process, bureaucracy and a corporate culture riddled with endless meetings.
In essence: the shine of start-ups can be lost.
Yet Manwaring assures this isn’t the case. He says the Emagin and Info360 teams have been actively integrated across the company, with Thouheed Abdul Gaffoor, the former CEO of Emagin, now the VP of AI.
The CEO wants to run the joint operation as a start-up, but with the broader shoulders of a global corporation for support.
"You’re right, often the idea of taking a start-up and putting it in a larger company kind of kills the excitement."
“You’re right, often the idea of taking a start-up and putting it in a larger company kind of kills the excitement,” he admits.
“The benefit we have is that the Info360 team within Innovyze was already up and running with this as a new differentiated product and thinking. Therefore, we were building and thinking that way, so when you add the Emagin people and technology, it gained more momentum.”
Since the acquisition, the company has hired several Amazon Web Services cloud architects and is “continuing to drive that business as much like a start-up as possible”.
“This means our aim is to deliver quickly, keep moving, not get bogged down in forms and checklists and not get distracted by striving for perfection,” he says, before adding:
“We’re all water people, and so we can move quickly and serve the water industry well without lots of corporate overhead and checklists and so on because we all have a very common culture.”
Setting the AI sights on industrial water
Interestingly, Manwaring says the AI solution was the missing part of the puzzle required to help his firm pivot into industrial markets.
According to the CEO, he’s taken the “Innovyze sales and marketing machine” and aimed it at industrial water applications, with the “Emagin product being the backbone of that offering”.
Manwaring references the metals and mining industry in Australia as a big water user.
“We can help them optimise their pumping costs, their water treatment costs after they've run water through their operations and need to remove contaminants,” he adds. “We've found that it is perhaps as big, if not bigger, than the public utility space which is exciting.”
Pre-Emagin days, Innovyze was mainly focused on municipal water treatment, with Manwaring adding that the acquisition was “a catalyst or a real drive for us to fully aim ourselves at the industrial water sector and provide a more meaningful offering”.
Maintaining a shopping list for expansion
Emagin was Innovyze’s first acquisition since investment group, EQT, bought the company for $270 million from Canadian engineering consultancy, Stantec, in 2017.
A company rooted in acquisition history, Innovyze plans to continue treading this path for expansion. As well as Stantec, its ancestry includes XP Solutions, Wallingford Software, MWH Soft and MicroDrainage.
Encouragingly, Manwaring doesn’t believe the predicted imminent Covid-19 pandemic downturn will dampen the company’s acquisition appetite.
“Yes, we still intend to expand by merger and acquisition where it makes sense for the foreseeable future. Indeed - we’ve got a shopping list,” he adds.
If Emagin could be called the AI piece of the Innovyze puzzle, what other parts are missing?
"We don't do much when it comes to groundwater analytics," admits the CEO. “This discipline lends itself well to numerical, physics-based modelling and monitoring. Another is the coastal, ports or near coastal analytics which, again, we don't address.”
He openly admits that he's "not interested in hardware", but companies providing technology that are also in the data collection space would seem be a logical fit to acquire and help grow.
Software as a Service (SaaS) is here to stay
Commenting that US-firm Fathom ceasing operations was a “blip or a one-off”, Manwaring believes software as a service (SaaS) is very much here to stay.
“Businesses continue to look for ways to decrease their capital expenditure (Capex) but their operational expenditure (Opex), continues to grow,” he adds.
"Opex continues to be an area of funding and the software as a service model suits that funding mechanism well."
“That trend has been consistent, and even as we find ourselves in a pandemic and crisis mode, people are perhaps now even tighter with the Capex purse strings, but they recognise operations must continue. Opex continues to be an area of funding. This software as a service model suits that funding mechanism well.”
The Innovyze CEO says he was recently shocked. Two Australian states recently told him they are moving their water companies to rely at least 80 per cent on software as a service, on cloud services, rather than in house services.
"This was a significant statement and data point to us," he states.
“It’s not an app for teenagers”
Manwaring believes that providing water infrastructure modelling and simulation software tools in the water space is a responsibility that needs to be taken seriously.
“It’s not an app for teenagers - it’s an application and technology that drives a meaningful part of society.
“I love the water software space,” he says enthusiastically. “I've spent my entire career in it in one aspect or another, and I anticipate continuing my entire career in the software space.”
He points out that we are currently at the stage with AI that we were 30 years ago when modelling was new. The cynical view then was that water systems couldn’t be accurately represented in a model, with people distrusting the claims.
“Look at where we are today,” he exclaims. “That same sort of transformation is going on with AI to where we entrust a bit more and a bit more. We will see the return and gain more confidence.”
The CEOs concludes: “It frees up the people, who are the real intelligence, to put their brainpower and their effort into areas that have been ignored.”
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