Barry Davidson founded Caddo Mountain Spring Water, LLC in 2014. The idea for the company came to Barry when he and his wife were road tripping across the southwest. During their trip, they were shocked to see how low the water levels were in some of the lakes they visited. After researching water depletion in the US, Barry decided to challenge himself to create a company that sources spring water in a sustainable way. After driving over 6,000 miles to scope out good water prospects, Barry and his wife settled on a sustainable, protected source in the mountains of west central Arkansas.
00:00 Matt Waller: Hi I'm Matt Waller, Dean of the Sam M. Walton College of Business. Welcome to Be EPIC the podcast where we explore excellence, professionalism, innovation and collegiality. And what those values mean in business, education and your life today.
00:20 Matt Waller: Today I'm talking with Barry Davidson, the founder of Caddo Mountain Spring Water who has an extensive background in investments. He's a two-time graduate of the Walton College with a Bachelor's degree and an MBA. Caddo Mountain Spring Water is committed to providing healthy water from a sustainable, protected source in the mountains of West Central Arkansas. In our conversation Barry explains what got him interested in the quality of bottled water that's available today and what he and his company are doing to bring us bottled spring water of unsurpassed quality.
00:58 Matt Waller: I have read a lot about the importance of drinking clean water, and that when we read on a label that a water is purified it doesn't mean it's pure in the sense that we would think. But would you tell me a little bit about your company and what you're doing, your purpose, that sort of thing?
01:19 Barry Davidson: My wife and I were on a three-week driving vacation from Dallas to Northern California in the spring of 2014. And we were standing on Hoover Dam looking down at Lake Meade. And Lake Meade today is near, in plummet level. In other words it's back to the level when they first put the dam in. And the people there have to make a decision pretty quickly now, whether to stop producing electricity or stop giving the city of Las Vegas water because the level of water is so low. Well, it had a dramatic impact on my wife and I from a sustainability environmental point of view and in addition we were paying about $2 a bottle for a good spring water on our trip. For a half litre $2. So I had just shut my hedge funds down the prior December the Central Bank's printing of money completely muted my quantitative systems. So I decided to look, the thing, so I tell me a wife, I wanna study bottled water when I get back.
02:36 Barry Davidson: So as soon as I got home I spent the next month or so doing a market research study on bottled water. And the metrics for bottled water today are very robust. I said, "I wanna do something with bottled water." So I identified what I thought was the best characteristics of water and then set out to try to find it. And there was no doubt in my mind from the beginning about certain characteristics, including calcium and magnesium. Magnesium is a wonder element and is served on cancer wards. But magnesium is also found in most good spring waters, like ours also, it has a neutral pH. The neutral pH is where life thrives. If you've ever had a garden, you know that if the pH gets out of balance, your garden is not gonna do well. In fact one of our investors in Caddo Mountain Spring Water has a PhD in Physics from the University of Arkansas. And I can tell you in our discussions before he invested, he asked me questions about pH and I know he was struck by the fact that our pH is seven which is perfectly neutral.
03:51 Barry Davidson: So that's kind of the background of how I got started. And once I identified the type of water we wanted, I spent six months, drove 6,000 miles, looked at a lot of wood atrium, thousands of springs and it exists because people in geology early on thought they could identify minerals by looking at spring waters. Because water has a memory, it will attract the elements that are out there. But that was inconclusive but I created all this research for me to look at springs that were in place. So that's pretty much how we got started.
04:33 Matt Waller: Currently the Americans spend over $15 billion per year on bottled water, the overall US market is growing at 9% per year, with the natural foods water category growing 18% per year. High end water prices are up 28% in the past three years and overall consumption is growing at greater than 700 million gallons a year. Those are impressive growth numbers. And so the marketing to get into a growth market is very different than marketing to get into a flat market or a declining market. How do you... What are some of the approaches you're using from a marketing perspective?
05:18 Barry Davidson: If you Google water crisis in the US today, you'll get about 235 million hits. There's virtually not a day that goes by that there's not a news story or somebody writing a post article on water. So there's a lot of free press out there that lends itself to our product, which is unsurpassed quality. And that's what I was after when I set about to find our source water track, which is in Montgomery County here in the State of Arkansas. So we're playing off the trend in health and news just from the environmental perspective. We couldn't have more attention drawn to water than we're getting today. I have a strong background in finance. I was a hedge fund manager for seven years and that led me to the belief that a hard asset investment like we have is the best possible investment.
06:25 Barry Davidson: Once we get on the shelves, the demand for our product will not go away. And you have to have water to live, you can't go over three or four days without water to live. And then people... The reason the natural foods market is growing an 18% is people are getting smarter about what they're putting in their bodies. And water is a big part of that. And we are not as strong financially as we need to be, we're still in our equity capital raise. Partners capital to date is about a million dollars. But importantly we own our source water track fee simple. Most of our competitors do not. There's a new paradigm in marketing today and the ability to market and target via videos on YouTube is unsurpassed.
07:21 Barry Davidson: We can do for pennies on the dollar, what it would have taken years ago to market our product. We can target our audience. We've already got a campaign concept in place, and in fact our first video that we did was a myth busters concept. Let's bust the myth that all bottled water is good for you. And we actually used Robert Lee who is the narrator of MythBusters from down under. By the way the Australians know a lot about water because they don't have enough of it. And Robert narrated our first video busting the myth about bottled water being good for you. All bottled water being good for you. And in that video, we disclosed that there was at least one major producer, who had fracking fluid contaminants in two of his brands. And you know what they did about that?
08:19 Matt Waller: What? What did they do?
08:20 Barry Davidson: They hid it on page 22 of their water analysis report. The industry is not very transparent and we're gonna bring transparency to the forefront.
08:33 Matt Waller: Is that one of the reasons you're interested in blockchain?
08:37 Barry Davidson: Oh, absolutely. And innovation. I've always been innovator. We're gonna have the first water on the planet bottled by the power of the sun by virtue of a USDA grant that's gonna help, partially help offset our cost of our solar power system. We're thrilled about it. There's a problem in bottled water and it's with the plastic bottle. We're all about recycling and by virtue of our solar power, we will start out as a low-carbon footprint product and hopefully move to a no carbon footprint product. Arkansas has this net metering law which allows us to put our excess electricity back onto the grid.
09:28 Matt Waller: Barry I noticed that you have a lot of passion around water. And I know your story as to how you got interested in this in the first place, but would you mind just sharing a little bit more about your passion?
09:42 Barry Davidson: Well, originally, my market research story in the base for starting the company was financial. A hard asset investment with good returns. But as I've gotten into water in more detail and now I have over 10,000 hours into this venture from a grass roots level of exploring for it and researching about water to high end finance and marketing. Half of this project now for me is a social impact mission. Is to educate people about the water they're drinking. Whether they're gonna drink our water or not, they need to know about the water they're drinking and hopefully bring about better water quality standards more transparency. The number one and two killers in America today are cancer and neurological disorders. The contaminants in water can be linked to both of those diseases. So I think we can affect millions of people's lives just through education. There are so many areas we can improve on, from getting the fluoride out of our municipal waters that we're putting into it. The Europeans outlawed fluoride in their water over 60 years ago. Arkansas is a natural state, we need to move to only four stroke engines, outboard motors on our lakes and streams. Because two stroke engines pulley, four stroke engines do not, they're more self-contained. So there's a lot of things we can do to keep the water pristine and protected.
11:21 Matt Waller: Now Caddo Mountain Spring Water comes from a reservoir that is unusual in the sense of some of the geological characteristics. Would you mind talking about that?
11:37 Barry Davidson: There are three USGS designated hydrological units that feed our track. And in fact there probably should be a fourth which is the Caddo River. It's this beautiful Spring fed mountain stream but it only runs for 80 miles. So I think in the USGS's thinking it wasn't a large enough stream to designate it as its own hydrological unit. The other ones are the Washita River that is hundreds of miles long. The little Missouri river as well. The Washita mountain's aquifer is actually the confined aquifer that sits underneath our 104 acres source water track in Montgomery County Arkansas. It is 48,000 square miles. So it's very large and it's very deep from 250 to 1250 feet deep. The rock is fractured and tilted. It's tilted 60 degrees so that when it rains, the aquifer quickly replenishes itself. Without the tilt in the geology, water will typically just run-off.
12:07 Barry Davidson: We sit in this particular piece of geography where Arkansas has the only east-west mountains in the United States. And when we get the Gulf flow over the southern east-west mountains, it rains. Our source water track gets 60 to 64 inches of rain annually. And that's kinda had at a minimum, two years ago we probably had 80 inches of rain. So that makes our track sustainable and renewable from every sense of the word.
13:22 Matt Waller: Barry thank you so much for taking time to talk with me about Caddo mountain spring water. It's really exciting what you're doing.
13:30 Barry Davidson: Thank you again Dean. You're my favorite Dean in my favorite school. And one thing I can tell you, I think our best days for the university in the Walton school and Caddo Mountain water are all in front of us.
13:50 Matt Waller: Thanks for listening to today's episode of The Be EPIC podcast from the Walton College. You can find us on Google, SoundCloud, iTunes, or look for us wherever you find your podcasts. Be sure to subscribe and rate us. You can find current and past episodes by searching beepicpodcast one word, that's B-E E-P-I-C podcast. And now be epic.