FreeWater is an innovative startup that has ingeniously combined the power of philanthropy and business to address some of the world’s most pressing social issues, namely water scarcity and pollution. Based in Austin, Texas, FreeWater was founded by Josh Cliffords, a visionary entrepreneur who conceived the idea after volunteering with refugees who had limited access to clean water. The startup has reimagined the conventional business model, using advertising as a revenue stream to provide free, clean drinking water and contribute to social causes.
The company’s mission is multifaceted, but at its heart, it seeks to solve the global water crisis and reduce environmental pollution. It’s a well-known fact that an estimated 800 million people across the globe live without safe drinking water, and an alarming 3.6 billion people experience water scarcity for at least one month each year. FreeWater aims to tackle these statistics head-on, offering a lifeline to those in need while redefining the relationship between businesses, consumers, and charitable giving.
What sets FreeWater apart is its unique and innovative business model. The company provides beverages in eco-friendly, BPA-free packaging, such as aluminum bottles or paper cartons, which carry advertisements. This packaging, in essence, becomes a mobile billboard, providing companies with a unique advertising opportunity while funding the provision of clean water. This model empowers businesses to advertise while contributing positively to society and the environment.
The model is as flexible as it is innovative. FreeWater offers two primary business avenues: a B-to-B model, where companies can choose to distribute the products either for free or for a profit, and a B-to-C model which exclusively features free water options. Moreover, the company allows advertisers to connect QR codes to the packaging, thereby offering consumers a range of interactive content, such as discount coupons, videos, and more. This innovative approach to advertising not only creates a more immersive and engaging experience for consumers but also offers businesses a unique way to connect with their audience.
Further adding to its innovative approach, FreeWater has also established partnerships with other non-profit organizations and community outlets. Through these partnerships, these organizations can use FreeWater as a fundraising tool by selling the ad space on the bottles themselves. This model of collaborative growth and shared success serves to expand the reach and impact of the company’s mission.
In addition to its primary mission of providing free water, FreeWater has a strong philanthropic underpinning. For every beverage sold, the company donates 10 cents to charities that build water wells in Africa, directly contributing to alleviating water scarcity in regions that need it the most. In this way, every purchase or consumption of a FreeWater product not only quenches a thirst but also contributes to a larger, global cause.
FreeWater’s Business Model Innovation
The Origins of Their Business Model Innovation
The innovative business model of FreeWater was born out of a desire to address one of the world’s most pressing challenges: water scarcity. The company’s founder, Josh Cliffords, conceived the idea while volunteering with refugees who had limited access to clean water. This experience revealed a profound
issue that Cliffords sought to address, leading to the inception of a business model that was innovative and socially impactful.
FreeWater was self-funded initially, with personal investments of over $100,000 from Cliffords and his wife, spread out between 2020 and the first half of 2021. As the company grew, so did the funding, with an estimated total of $250,000 raised by 2023, half of which came from followers on the social media platform TikTok.
At the core of FreeWater’s business model innovation is a shift in the conventional understanding of advertising. The company uses the packaging of its products as ad space, an approach that not only allows for the provision of free, clean water but also offers a unique advertising opportunity for businesses. This innovative model is disrupting the direct mail industry, which, despite the technological advancements of the digital age, remains one of the highest returns on investment avenues in the U.S. ad industry.
Their Unique Value Proposition
FreeWater’s value proposition is multifaceted, targeting different stakeholders in unique ways. To consumers, the company offers free, clean water in eco-friendly packaging, a value proposition that is both practical and altruistic. Every bottle of water consumed contributes to a broader cause, allowing consumers to play a role in addressing the global water crisis.
To businesses, FreeWater offers a unique and effective advertising medium. The company’s aluminum bottles, and paper cartons serve as mobile billboards that are viewed multiple times before being discarded or refilled, offering businesses a cost-effective method of advertising that simultaneously contributes to a social cause.
To the broader society, FreeWater offers a tangible solution to the global water crisis. The company donates 10 cents of every bottle sold to charities building water wells in Africa, directly addressing water scarcity in areas that need it most.
How They Deliver This Value
FreeWater has developed a unique approach to deliver its value proposition. The company uses a two-pronged business model: a B-to-B model and a B-to-C model. In the B-to-B model, businesses can choose to distribute FreeWater products for free or for a profit. In the B-to-C model, only free water options are offered.
The company uses innovative methods to distribute its products. FreeWater frequently targets busy foot-traffic spots around Austin, Texas, for distribution, such as downtown bridges, the University of Texas campus, and various events. Businesses can order bottles directly or utilize FreeWater’s distribution network, depending on their preference and business needs.
In addition, FreeWater has formed partnerships with other nonprofit organizations and community outlets. These partners can use FreeWater products as fundraising material, selling the ad space on the bottles and receiving between 10 and 25 cents per beverage.
FreeWater also invests in technology to enhance the consumer experience and value delivery. Advertisers can connect QR codes to the packaging, giving consumers the opportunity to access coupons, videos, food orders, surveys, music downloads, movies, TV shows, video games, and more.
The Impact on Their Target Market and Society in General
FreeWater’s innovative business model has had a significant impact on its target market and society. The company’s freewater initiative, funded by the advertising costs paid by businesses, has allowed countless individuals to access clean, potable water at no cost. This not only addresses the immediate needs of the individuals who consume the water but also helps alleviate the broader global issue of water scarcity.
The company’s impact extends beyond water provision to the realms of environmental sustainability and charity. FreeWater packages its water in eco-friendly, BPA-free aluminum bottles or paper cartons, reducing plastic waste and contributing to environmental conservation. Each sale of FreeWater’s beverages also results in donations to charities building water wells in Africa, directly contributing to efforts aimed at alleviating water scarcity in the region.
In terms of market impact, FreeWater has offered businesses an innovative advertising solution that reaches consumers in a unique and tangible way. The use of product packaging as advertising space has disrupted traditional advertising methods, offering businesses a new way to reach their audience while contributing to a social cause. This has led to several companies, including Sportswest, Manolis, and Juice Consulting, advertising with FreeWater, with many others, such as Google Fiber, Air France, and the Dallas Cowboys, expressing interest.
While the impact of FreeWater’s business model innovation is already significant, the company aims to expand its reach further. By distributing at least 250,000 water bottles in a year, with a stretch goal of 1 million or more, and pre-ordering 25 Tesla Cybertrucks for distribution, FreeWater is set to grow its impact both on the market and society.
Key to Success
FreeWater is an innovative social enterprise based in Austin, Texas, that provides water for free while simultaneously making donations to charity. This unique approach is made possible through a business model that monetizes advertising space on their water bottles and cartons. By doing this, FreeWater offers a novel value proposition that aligns with its social impact goals, contributing to its burgeoning success.
FreeWater’s primary value proposition is the distribution of free, clean water to consumers. Its products are either aluminum bottles or paper cartons, which contain natural spring water. The cost of producing and distributing these products is covered by the advertisements printed directly onto them. These ads provide companies with a unique way to reach their target audience: consumers are likely to look at the water bottle at least 10 times before discarding it, according to the founder and CEO, Josh Cliffords.
FreeWater’s business model also includes a B2C aspect, which exclusively offers free water. Additionally, it provides a platform for companies to connect QR codes to their packaging, leading consumers to a variety of digital content and offers, such as coupons, videos, surveys, and more. This provides additional value to advertisers, enhancing the appeal of FreeWater’s offerings.
Alignment with Social Impact Goals
FreeWater’s innovative approach is closely aligned with its social impact goals. For every beverage sold, FreeWater donates 10 cents to charities that build water wells for people in need in Africa. This is a
significant commitment, considering that FreeWater’s primary product is distributed for free. The startup was inspired by the founder’s experiences volunteering with refugees who lacked access to clean water, and its mission resonates with this background.
Key Factors Contributing to FreeWater’s Success
Several key factors have contributed to FreeWater’s success:
Innovative Business Model: FreeWater’s unique model of providing free water funded by advertising revenue is a significant factor in its success. This model disrupts traditional advertising, and the company has capitalized on the high return on investment that direct mail advertisements typically provide. According to Cliffords, the company’s approach is more effective and less intrusive than constantly sending ads through mail or digital channels.
Effective Use of Social Media: FreeWater has used social media platforms like TikTok to effectively raise awareness and funds. The company has reached a valuation of $7 million, with about half of its $250,000 fundraising coming from social media followers.
Strategic Partnerships: FreeWater forms partnerships with other nonprofit organizations and community outlets. These partners can use FreeWater as fundraising material by selling the ad space themselves. FreeWater grants between 10 and 25 cents per beverage to these partners, creating a mutually beneficial relationship.
Expansion Plans: FreeWater plans to introduce free vending machines as part of its future distribution model, and it aims to expand its range of free products, each linked to a different charitable cause. The company also plans to distribute 250,000 to 1 million water bottles this year, enhancing its reach and impact.
FreeWater’s journey is not without challenges. The company is competing with large beverage manufacturers for a limited supply of sustainable materials like aluminum and paper cartons, and there are also hurdles related to distribution logistics. Despite these challenges, the startup’s innovative approach, dedication to its social mission, and effective engagement strategies are key to its success. It offers an interesting case studyThe first commercial for FreeWater on TikTok was posted on December 1, 2021. It features an overview of the company’s mission and business model. The TikTok video explains that FreeWater provides free beverages in eco-friendly packaging paid for by the ads printed directly onto the bottles or cartons. The beverages are packaged in aluminum bottles or paper cartons and the company donates 10 cents from each beverage to charities that build water wells for people in need in Africa. The company’s founder, Josh Cliffords, created the startup after volunteering with refugees who had little access to clean water. FreeWater has two separate business models: B-to-B and B-to-C. In the B-to-B model, advertisers can choose to distribute products for free or for a profit, while the B-to-C model features only free water options. Advertisers can connect QR codes to the packaging for consumers to scan for coupons, videos, food orders, surveys, and more. The company also forms partnerships with other nonprofit organizations and community outlets that can use FreeWater as fundraising material by selling the ad space themselves. FreeWater will grant between 10 cents and 25 cents per beverage to the partner.
In terms of finances, FreeWater is a self-funded company that began with personal investments from Cliffords and his wife of more than $100,000, spread out between 2020 and the first half of 2021. The company does not have any employees and instead has nine partners working for equity. Distribution of
the bottles began in 2021, and that’s when the company started raising outside money. So far, Cliffords has raised roughly $250,000, about half of which came through followers on social media platform TikTok. The company’s value has reached $7 million. Companies pay about $1,000 for a pack of 500 to 600 aluminum bottles. The company earns an estimated profit of 25 cents per bottle. FreeWater also donates 10 cents of every bottle sold to Well Aware, an Austin-based nonprofit that builds water wells in Africa.
The company plans to distribute at least 250,000 water bottles this year, with a stretch goal of 1 million or more. However, distribution remains a major hurdle, as FreeWater has turned down some business because there was no efficient method to get the bottles into consumers’ hands. To address this, the company just received its first truck, which can distribute 3,500 bottles at a time, and has pre-ordered 25 Tesla Cybertrucks.
Moving forward, FreeWater aims to introduce free vending machines as part of their future distribution model. These vending machines will be emptied daily, and each location will donate between $10,000 to $36,000 to charity annually. The company also plans to limit users to 1-3 free drinks/snacks per person daily through their mobile app. FreeWater’s future vision extends to creating “free supermarkets” where each new free product they introduce will donate to a different charitable cause.
The company has already financed two water projects in Kenya by distributing free spring water in the USA. Their mission is to put the highest quality products in consumers’ hands for a negative price since the water is free and it is donated to charity.
FreeWater’s business model is both innovative and disruptive, and it holds several implications for the wider beverage and advertising industries as well as for social impact companies. The company’s unique approach to combining philanthropy and business—providing free, clean water funded by advertising—has the potential to shift traditional paradigms and inspire other enterprises to explore similar social impact models.
Firstly, FreeWater’s strategy offers a novel approach to advertising. By turning a product’s packaging into advertising space, FreeWater is redefining how businesses can reach consumers. This model, which disrupts traditional advertising channels such as direct mail or digital ads, provides a unique and recurring exposure to brands, as customers repeatedly view the ads printed on the bottles. As a result, other companies in both the beverage and advertising industries may be inspired to adopt or adapt this model, leading to a potential shift in advertising strategies. The success of this model, however, will largely depend on the extent to which consumers are willing to accept advertisements for products they use daily.
For social impact companies, FreeWater’s model serves as a powerful example of how businesses can address global issues while maintaining profitability. The company’s pledge to donate a portion of its earnings to building water wells in Africa demonstrates how businesses can create a positive social impact and contribute to resolving global crises. It’s a model that other social impact companies could emulate, particularly those seeking to balance profitability with philanthropy.
However, FreeWater’s model also poses some potential challenges and areas for improvement. One significant challenge lies in the logistics of distributing free water. The company has turned down some business due to the lack of an efficient method to get the bottles into consumers’ hands. To address this, FreeWater plans to distribute at least 250,000 water bottles in a year and is considering the use of free
vending machines as part of its future distribution model12. Other companies considering a similar model will need to take into account the logistical difficulties of distributing a free product at a scale.
Sustainability is another area of concern. Although FreeWater uses eco-friendly, BPA-free packaging, the manufacturing and distribution of bottles—whether plastic or not—still has an environmental impact. FreeWater currently uses aluminum and paper cartons for its beverages, but it has faced difficulties sourcing these materials. The company hopes to open a manufacturing plant in Austin to cut costs, but the environmental implications of such a move will need to be considered1.
Furthermore, while the advertising-funded model allows FreeWater to give away its product for free, it also means the company’s financial health is heavily reliant on advertisers. If for some reason advertisers decide to pull back on spending, FreeWater could potentially face financial difficulties. Diversifying revenue streams could be one way to mitigate this risk.
Finally, FreeWater’s model is built on a high level of public goodwill and acceptance. If, for any reason, public sentiment was to turn—due to controversial advertisers, for example—it could harm the company’s reputation and bottom line. The company will need to consider these potential risks as it continues to grow and expand.
Overall, while FreeWater’s business model presents a promising example of a for-profit company addressing a major global issue, it also presents potential challenges. As with any innovative business model, its broader implications for the industry and other social impact companies will become clearer over time.
In conclusion, the case study of FreeWater underscores the potential of innovative business models to realize significant social impact. FreeWater has been able to create a unique business model that integrates advertising, sustainability, and social good. The company has cleverly repurposed advertising space on beverage packaging to fund the provision of free water, while also supporting charitable causes. This symbiotic relationship between profit-driven companies and social causes is what makes this model unique and disruptive.
The FreeWater model stands as a testament to how enterprises can be creative in solving societal issues, without relying heavily on donations or government support. It also presents a new way for advertisers to reach consumers, potentially disrupting traditional advertising channels such as direct mail. By transforming a mundane object like a water bottle into a platform for advertising, FreeWater has found a way to ensure repeated exposure to the advertisement, while also promoting sustainable practices using eco-friendly packaging materials.
Importantly, this model allows consumers to engage in charitable acts through their everyday actions, like drinking water. This ease of contribution could potentially increase the overall societal participation in charitable acts and foster a culture of giving. Furthermore, by aligning the interests of consumers, advertisers, and social causes, FreeWater’s model could inspire other social impact companies to look for similar win-win scenarios.
Nonetheless, as with any disruptive innovation, FreeWater’s business model also faces challenges. These include operational hurdles, such as the logistics of distributing large quantities of water, the sourcing of
sustainable packaging materials, and the management of a diverse range of partnerships. Moreover, the model’s success hinges on the willingness of advertisers to participate, and the consumer’s acceptance of the idea that their water bottle is also an advertising platform.
Considering these challenges, continuous innovation and adaptability will be key to FreeWater’s future success. For instance, the company’s plan to incorporate free vending machines and mobile apps into their model shows its willingness to iterate and innovate to overcome distribution challenges.
The case of FreeWater emphasizes the importance of innovative business models in driving social impact. By integrating commercial and philanthropic objectives, companies can open new possibilities for societal improvement and business growth. In a world where consumers increasingly expect businesses to contribute positively to society, such innovative models can offer a competitive advantage while making a tangible difference in people’s lives.
FreeWater’s innovative business model serves as a case study for other social impact companies and underlines the potential of for-profit businesses to contribute meaningfully to solving societal issues. It shows how business innovation can lead to social innovation, and how the two can be interwoven to create models that are sustainable, impactful, and profitable. It’s a reminder that in the quest for social impact, the creativity of business model design should never be underestimated.
Austin Inno – How FreeWater makes money while giving away its product (2023). Bizjournals. Retrieved from https://www.bizjournals.com/austin/inno/stories/news/2023/06/13/freewater-free-product-profit.html
FreeWater is the startup connecting people to free, clean water (2023). Inhabitat. Retrieved from https://inhabitat.com/freewater-is-the-startup-connecting-people-to-free-clean-water
Social Impact Companies – Top Social Impact Startups 2023 (2023). Startup Savant. Retrieved from https://startupsavant.com/social-impact-companies/
World’s First Free Beverage Company Says Free Vending Machines Are Next (2022). Yahoo Finance. Retrieved from https://finance.yahoo.com/news/worlds-first-free-beverage-company-153900684.html
FreeWater and the emergence of the free economy (2022). Medium. Retrieved from https://medium.com/@FreeWater/freewater-and-the-emergence-of-the-free-economy-6fd2c77d1b59
The Free Economy: How Giving Away Products Can Be Profitable (2023). Harvard Business Review. Retrieved from https://hbr.org/2023/05/the-free-economy-how-giving-away-products-can-be-profitable