44 min read

🎧 #089: M&A Roundup with Joe Aamidor

“The fragmentation is a very real issue. I don't see it necessarily resolving anytime soon, just because of a lot of these other trends in the market."


—Joe Aamidor

Welcome to Nexus, a newsletter and podcast for smart people applying smart building technology—hosted by James Dice. If you’re new to Nexus, you might want to start here.

The Nexus podcast (Apple | Spotify | YouTube | Other apps) is our chance to explore and learn with the brightest in our industry—together. The project is directly funded by listeners like you who have joined the Nexus Pro membership community.

You can join Nexus Pro to get a weekly-ish deep dive, access to the Nexus Vendor Landscape, and invites to exclusive events with a community of smart buildings nerds.

Episode 89 is a conversation with Joe Aamidor of Aamidor Consulting. Joe is a friend of the podcast and has been on the show before.

Summary

This is a total experiment so let us know what you think of this and we can do more of it.

We unpacked the three most interesting recent mergers and acquisitions in the smart buildings industry and dove into why, our reaction to them, and other trends they’re related to.

Without further ado, please enjoy this Nexus M&A Roundup pilot episode.

  1. Aamidor Consulting (0:32)
  2. 🎧 #002: Joe Aamidor (1:06)
  3. Johnson Controles (1:32)
  4. Lucid Motors (1:36)
  5. Joe's Newsletter (3:03)
  6. Envizi (10:12)
  7. Maximo (12:26)
  8. Tririga (12:29)
  9. IFMA (13:21)
  10. KPMG (21:27)
  11. Nantum (21:38)
  12. Planon (22:34)
  13. View (24:22)
  14. IoTium (24:28)
  15. RXR Reality (26:10)
  16. WorxWell (26:29)
  17. Helix (30:43)
  18. VTS (41:40)
  19. Hightower (41:44)
  20. Rise Buildings (41:56)
  21. Lane (42:05)
  22. HQO (42:17)
  23. Office App (42:30)
  24. SpaceIQ (42:36)
  25. Archibus (42:39)
  26. Envoy (47:20)
  27. OfficeSpace (47:25)
  28. Siemens (48:27)
  29. Comfy (43:38)
  30. JCI (48:44)
  31. Schnieder Electric (48:47)
  32. Cohesion (51:16)
  33. PropTech (54:58)

You can find Joe on LinkedIn.

Enjoy!

Highlights

  • Why are we talking about this? (3:02)
  • Deal #1: IBM buying Envizi (9:39)
  • Deal #2: View buying RXWell and IoTium (24:19)
  • Deals #3: Occupant experience apps (37:13)
  • Overall Trends (54:14)

Music credit: Dream Big by Audiobinger—licensed under an Attribution-NonCommercial-ShareAlike License.

Full transcript

Note: transcript was created using an imperfect machine learning tool and lightly edited by a human (so you can get the gist). Please forgive errors!

James Dice: hello friends, welcome to the nexus podcast. I'm your host James dice each week. I fire questions that the leaders of the smart buildings industry to try to figure out where we're headed and how we can get there faster without all the marketing fluff. I'm pushing my learning to the limit. And I'm so glad to have you here following along.

James Dice: This episode is a conversation with Joe Amador of Amador consulting. Joe is a friend of the podcast has been on the show before, but this is a total experiment between the two of us. So let us know what you think of it, and we can do more of it. If you like it. We unpack the three most interesting recent mergers and acquisitions in the smart buildings industry.

And dove into why. Our reaction to them and other trends they're related to. So without further ado, please enjoy this nexus M and a Roundup pilot episode. Hello, [00:01:00] Joe. Welcome back to the show. It's been awhile. Thank you. Uh, just for people that haven't subbed, Joe was on a episode two, and this will be something like episode 89, something like that. So it's been awhile since you were on the show, uh, for people that haven't listened to that episode. Can you, uh, give yourself a

Joe Aamidor: little interesting.

Yeah, absolutely. Uh, so I work, uh, as an independent consultant in a smart buildings space. My background is mostly product management spend a number of years at Johnson controls working on a cloud-based solution about 10 or so years ago at this point, worked at lucid, uh, now part of acuity, but also one of the, I would say in the category of the energy management, uh, software, uh, uh, software solutions.

Um, but over the past six years I've been working for myself. Specifically working with some of those companies that need help on the product front, that can be, uh, specific things like competitive analysis, voice of customer market sizing, helping them figure out the channel [00:02:00] market strategy they want to execute on.

Do a fair bit of work with investors who are looking at commercial due diligence for specific deals. Uh, and then, you know, as, you know, little projects come up or, uh, you know, projects come up that don't quite fit into that. But really my core focus is the smart building space. So operational technology sensor-based in commercial buildings usually, uh, and helping on the product market strategy.

Cool.

James Dice: And Joe, Joe's new to Colorado. So we're both Colorado. I 20 connection going here. There's a little bit off of by 25, but

Joe Aamidor: I guess a little bit, you can get there easily. Yeah. My wife, her family's in Nebraska. I'm from the Midwest. We have little kids. Yeah. Uh, throughout the pandemic, it was, we were really far from all of our family, so we wanted to get closer, but it's hard to go from a flat Midwestern city of Chicago where we met to, uh, you know, a lot of mountains, a lot of just outdoors and then losing that.

So we were trying to find that balance. And so, yeah. [00:03:00] Cool.

James Dice: So, so for those of you that don't read Joe's newsletter already, we're going to put the newsletter in the show. Um, the impetus for this podcast conversation was I read Joe's newsletter. And then I just, I had an idea that the newsletter breaks down all these different M and a transactions that happen each month.

What if we do. Kind of shot the shit on why these transactions are happening. So what our idea is to basically take the top two or three most interesting to us, um, transactions that happen each month, um, and kind of tell the why and our thoughts on those transactions. So again, this is an experiment. If you guys like this, let us know, um, So I think why we want to talk about this and why you and I are both so interested in, in M and a is because there's just like extreme, extreme market fragmentation.

And it's been like that. For as long as I can remember, but [00:04:00] it's also getting seemingly worse every month. So I have, you know, the nexus vendor landscape and it's got, I think the last time I checked it had about 275 different vendors on it. And this is not as you know, this is not prop tech, like the huge umbrella PropTech.

This is not that it's. The niche on OT data and energy, and a little bit of like maintenance optimization, I'd say is like what, like back of the house type of software. So of that 275, maybe there's a few sort of like what I would call front of the house vendors, but like, we're talking to a lot of different companies in this pretty niche.

Joe Aamidor: Space

James Dice: at this point. And I'd also say as well, I don't feel like I have all of the vendors in Europe. I don't have all the vendors in Asia. I think this is like, like it's, it's nowhere near complete. Um, and I [00:05:00] still add eight to 10 new vendors every month. And so it's like, it's almost like this fragmentation problem continues to get worse.

And then meanwhile, we have this M and a. Activity that seems to be picking up as well. So it's almost like there's a reaction from existing business community, existing investor community to say, okay, let's start to consolidate this. And so I think it'd be fun to just unpack that a couple of times a year.

Um, I didn't want to like, basically look at give people a concrete example by what we mean by what I mean, like. Bye fragmentation. And let you kind of respond to that. If I look at, and I've done this, this writing recently, I've done this writing around the de-carbonization journey. Like if I have a portfolio of buildings and I'm going to decarbonize that portfolio, my first step is this.

And I have, you know, many steps along that journey to where I get to some sort of zero carbon, um, end result that I'm looking for in [00:06:00] 2030 or 2040 or 2050 or whatever. But if you look across that journey, Today's building owners. Today's portfolios literally have to switch between. I think I'm at something like eight to nine different categories of software vendors right now.

And most vendors do like stop in their little niche and they don't, they don't help along other parts of the journey at this point. Um,

Joe Aamidor: so that's just example. Yeah. They're separate enough that they don't necessarily come together and say, let's partner. Right. So I can hand you off. Yeah. I didn't mean to interrupt you, but, but yes.

Yeah,

James Dice: yeah. And if you look at it from the vendor's standpoint, they all have different clients, right. So if they partner with somebody else on the adjacent step in the journey, That's going to be a good partnership for one client, but it's not going to make sense for another client they have. And so I think there's also confusion on the vendor side with like, how do we approach this?

What do we do? And in order to really follow our [00:07:00] clients along this journey that they're trying to go on. So I think it's a problem from all perspectives, not just people that are making spreadsheets or databases on all the vendors in this space. I think it's a problem for everybody. It's a problem for owners that are trying to buy new software, right.

Um, and so, so what, what are your thoughts on the overall sort of fragmentation?

Joe Aamidor: Yeah. I'm glad that you have some actual quantification, right? To say you have a landscape. I informally try to track the market or segments of the market. I've done some market studies for clients that are looking at a specific part of the smart building landscape, you know, technologies to operate your, your real estate, your buildings more efficient.

And, you know, space utilization, for example, which may not even be really core in your, landscape. I had a client that I think identified 75 plus companies that have a sensor. You can put it in a building it'll measure people, measure movement, uh, and, and you could argue there's probably more even than that.

[00:08:00] Um, so you're both seeing. Companies enter the market because things like decarbonisation things like operating your real estate more efficiently, more in a condition-based way, not just the schedule based way, uh, the return to work theme of just, how do we bring people back and use our offices more, uh, more flexibly?

Well, we probably need technology to help us. There's a lot of big picture, uh, drivers that are causing people to spend money on technology, which is causing people to invest in and causing new companies to emerge. That's creating more companies, but you're also seeing bigger companies look at this as a core part of what they want to offer.

And then a few of the, the, uh, at least one of the MNA deals we're going to look at, I think is, is exactly this is a category of technology that fits in with our other categories. It dovetails in if you will, and we don't do this very well today. Let's add it. Um, so for the buyer, difficult because you have to figure out if you're buying these [00:09:00] technologies or want to buy them, who are the leading vendors?

The market's changing a lot, right? By the time you go through a cycle. Who are the right vendors for me to consider in a more formal process. There may be more vendors. Some of those vendors may have been acquired. So you might look at it and say, oh well, are they going to pivot away from what I really need them for given that they've just been bought by this other big company that, you know, I can kind of read roadmap to some degree based on the press release.

So the fragmentation is a very real issue. I don't see it necessarily resolving anytime soon, just because of a lot of these other trends in the market.

James Dice: Totally. Well, I think that's a good sort of intro to the three deals we wanted. We wanted to unpack today. Um, so the first one, so, so I think again, I want to reiterate on your, your, your newsletter.

Each newsletter probably has like 10 to 15 different things like this that have happened and they come out every month. Right. So we're just picking, [00:10:00] we're just picking three that we think are important from the last couple of months. Yeah. So the first ones, um, IBM buying Envizi. Um, and so you, do you want to sort of start us off by sort of explaining kind of what, what each of like what's the overall trend here?

I think first. And then what does each company do separately and why would that be sort of interesting to combine them?

Joe Aamidor: Yup. There's a couple of big themes I see here. One of course is. Energy management in real estate. And you could say energy management and ESG and real estate, uh, is becoming, it has, has been top of mind.

I mean, my time at JCI, this is exactly what we were doing. It was 10 years ago. This is a top of mind issue. Uh, it's though at the same time, not necessarily an independent standalone software. Category, or I think IBM looks at this and says, this isn't necessarily something that needs to be [00:11:00] standalone.

So that that's a big trend. You see real estate companies, you see corporates looking at commitments to reduce carbon emissions. You also see them look at ways. What ways to, to reduce operating costs. Energy is usually a big cost, two $53 per square foot per year. Uh, probably higher in Europe. That's at least in the us.

Uh, large corporation with millions of square feet, spending a lot on energy. Uh, and there's also data 10, 20, 30, 40, even some cases, percent of the energy may be wasted. So a lot of opportunities to cut cost out with better data, um, that though that value proposition because of the fragmentation can be hard for a vendor, especially an independent, smaller vendor to, to really use, to drive a lot of sales.

Um, So that's, I think the solution that's being brought to the market, there's obviously other, components, actual identification of inefficiencies in your building. Yeah. There's the schedules of your HVAC system are very wrong compared to how your building is. [00:12:00] And, in busy, you know, it goes there too, but broadly it's about managing these data, providing, uh, an ability to drive cost reduction through energy spend or energy savings, and also supporting some of this emerging reporting around ESG.

IBM, interestingly enough, they have some businesses that dovetail nicely, right? They have Maximo asset management. They have TRIRIGA TRIRIGA is interesting in that 10 years ago or so when it was acquired by IBM, a lot of the messaging was very similar to what, what in busi does around carbon inventory, uh, developing a carbon inventory energy man.

Now, when you look at the TRIRIGA website, it's very much focused on being an IWMS, which is integrated workplace management solution. You could think of that as bringing elements of a CMMS and asset management solution, uh, kind of a tenant facing solution, bringing all of that together. There's been a lot of transactions there.

I think we'll talk about that later. The Envizi piece fits nicely there. Um, you, you have [00:13:00] facility managers, facility operators, they're tracking assets, they're maintaining assets, they're repairing things. They want to operate the workplace more efficiently. They want a data solution to help just track who's doing what a good number I've seen.

And this is a kind of a rough number. But I think, uh, if my, the international facility management associates. in terms of number of facility staff per building, the number I've seen there is between one FTE per 50 to a hundred thousand square feet that can include janitorial staff. But in some cases, the janitorial staff is doing some of the facility management.

So you think of a campus of 10 million, 5 million square feet. Big. They might have dozens of people on staff doing various types of facilities. So having a software solution versus having paper makes a lot of sense. So then you look at well, okay, well, the facility management team is probably somewhat concerned with energy, maybe more and more in the future.

They're concerned with energy, maybe the corporate office realizes if we want to hit our carbon emissions targets, we actually need to operate our facilities more efficiently that the buildings are each part of [00:14:00] our carbon footprint. So, uh, in busy dovetails really nicely. Envizi for its part, just a quick background on them.

They've been around for a fair bit of time. I'd say they're, they're a longer standing vendor in this category of energy management, uh, sustainability management than a lot of their peers they were based in Australia are based in Australia. They have staff in America. I think they have staff in Europe as well.

Uh, they've always, I found them to be a little under the radar. And what I mean by that is the. I've always seen from my own, um, uh, you know, seeing their website, you know, you know, meeting people at conferences, getting quick demos, very strong product. So in terms of just the capabilities, breadth of capability, depth of capability, very, very strong, uh, even people just word of mouth to have looked at it as a buyer said, yeah, it's a really competitive.

But they've been a little under the radar in the U S and that they're not always one of the top of my vendors that somebody calls me and just says, looking at some solutions, I thought you might want to compare notes for a few minutes. I'm happy to do things like that because he doesn't always come up as, oh, [00:15:00] we're looking at them as well.

Um, you know, but the product is strong from everything I've seen. They typically do well on some of these analysts reports that, you've talked about. Uh, but, but that's the core of where they're at. They've also done a good job. I think of expanding. They have a fault detection capability

there are companies that do fault section, well there's companies do energy management. Well, and while there is some overlap, it's not like every company does both. And this is one where they do both, um, everything I've seen is there, there are a strong company. Yeah,

James Dice: yeah, totally. Yeah.

That's what I was going to say to why it's compelling to me. When I, when I look at Envizi and I've done some digging on them as well for a couple of different projects. They are, when I talked about how fragmented the de-carbonization journey is, they're one of the rare vendors that you could put in like four or five different categories that go from, you know, ESG reporting, like a measurable, they go from there all the way down to FDD, like you said, so, yeah.

It's [00:16:00] one of those rare firms that covers that almost entire journey. And what I think here, that's interesting about a company like that. That's been doing this for so long. Is that a company like IBM, that's trying to sort of integrate, you know, ESG into, like you said, the idea of IWMS actually running a workplace.

And V and companies like Envizi has so many prebuilt integrations already. So they're automating utility bills, things like that, that, that have just already been done. And so I think there's a ton of value to a company like that as well. Like if you're starting from scratch and you're like, how are we going to get utility data?

Right. Utility data is like the cornerstone of ESG, right. It's basically like, what are we using? And five years later, are we doing what we said we were going to do? Right. All of that depends on utility data and the companies that have been doing this for awhile. Didn't used to be very sexy. Like an Envizi 10 years ago is [00:17:00] not a sexy company.

And now it's like, oh, you've built all this automation around utility data. That's now somehow

Joe Aamidor: really sexy. So even just understanding you look at a utility bill, I mean, we got utility bills for our homes. Of course, most people, I think.

James Dice: Yeah, the analytics, it's not just getting the data.

It's being able to create insights from that utility data that an energy engineer might, if they were looking at it,

Joe Aamidor: making it actionable. Being able to translate you have these data and then being able to figure out, well, what does all this mean? Is there a problem having just that knowledge? It's not necessarily technology knowledge, right?

So if you're good at building software, you might not know much at all about energy bills, utility bills.

James Dice: Right? So, I mean, let me just like, this is very similar to what I just said, but it's also my piece of skepticism around this deal. So if I look at this deal and I'm. Is this good for the industry as a whole, which is usually my lens, but I look at this deal and I'm like, is IBM trying to make, because if [00:18:00] you look at their press release, it's a lot about consulting.

Um, are they trying to make their consultants jobs easier, right? Or are they trying to actually like, so I think there's a dichotomy here. There's like make consultant's job easier, which to me means. I have external consultants coming in to help building owners with their decarbonisation journey. And like, that strikes me as a problem somehow, because I even, that's a really good thing that they're doing that, but I think it's a problem because what I see as like the final solution that we need to get to, like as a society is that they've integrated decarbonization into their entire.

Strategy their entire business, every layer of the business needs to be thinking about this and integrating better practices into their, their ways of doing business. Right. And so if this is a bolt on, let's take in busy and bolted on, and only the consultants are going to use it. Right. That's my piece of skepticism.

I think about this deal. What do you think?

Joe Aamidor: my [00:19:00] sense from looking at it, just again, reading the press release and knowing the industry, knowing, knowing what I know about. There's probably going to be a fair bit of effort to bring current, uh, Maximo and TRIRIGA clients on board to Envizi as well.

And just, this is an integrated platform. I think one of the things I've generally seen is while we have new categories of technology space utilization is a great one indoor air quality you could argue, especially with the pandemic has become an interesting area. We want to track and monitor air quality.

Maybe we integrate with our BAS so that we can ventilate more, or maybe we just monitor for now. And that gives us. you have this a challenge for a, commercial real estate or corporate real estate facility leader, or workplace leader, or a real estate leader. Do you start buying more products from more vendors and have more vendor relationships?

I think generally they would prefer not to have more vendor relationships if possible. So there's one place where IBM can say, look, we checked, not only already. We know in busy is a complete platform, but we're checking even more boxes with, with more product. Uh, [00:20:00] I, I think a lot of these companies also are moving to more just professional services, tech enabled services.

I don't think IBM's unique from that point of view. So I think this, this does give them the opportunity to do that as well. Um, yeah.

James Dice: Cool. Any other similar deals? I mean, you mentioned this trend of bolt-ons and your LinkedIn article that we'll also put into the show notes, any other similar trends, similar data that looked like this one,

Joe Aamidor: there was well, um, it was MRI bought late last year, east site energy east sites, actually a pretty good comp to Envizi, uh, in terms of, of everything they do.

Um, they, uh, I don't know if I w I definitely. Uh, known in the U S market based in England had an office though. And I think in the Midwest. So they were a known entity. They'd been around a while as well. So they weren't just, we entered the market three years ago. We've we've grown a huge amount. We've created a splash.

We got acquired. So an [00:21:00] MRI, obviously it's just a real estate software platform. So they're already in real estate, they're already focused on selling to real estate owners operators. And then this is just almost another module that they can bolt on. You had mentioned when we were prepping for this, KPMG has partnered with NANTUM.

What's interesting is to look at the dynamic. Partnering versus acquiring in some cases investing in, um, obviously Envizi is a pretty mature company. So an acquisition there by IBM makes sense. But in other cases, you could argue a partnership. Uh, NANTUM being kind of a smart building platform has ha has some of these same elements from operations, energy management.

Um, and, and KPMG, not exactly a peer of IBM, but doing a lot with corporate clients, the leaders at the company that are probably top of mind thinking, I need to plan around, uh, ESG and just carbon emissions. Uh, and KPMG is probably looking at that and saying, yeah, Don't just want everything to be in spreadsheets and, you know, we want more than spreadsheets.

Totally.

James Dice: Yeah. What's [00:22:00] coming to mind right now is, is I don't have a lot of background around a company, like get invisit getting bought. How much are other companies going to want to partner with them now that they're bought purchased by IBM? Like, if you're thinking about like, and I don't know, I'm just throwing a name out there, but like, think about like a plan on that's like an IWS competitor to try your TRIRIGA.

We'll plan on being able to lean on and busy for this, like as an application that sits on top of plan on, or will it just be basically like now there, they got to go find somebody else. So that's an interesting, like thought about the future of this. As I thought the future of this industry would be, we have these platforms, we have these applications that are really good at what they do.

They sit on top of these platforms. Right. But the more and more of these applications, like specifically. Functional applications get purchased that limits the partnering that limits the, you know, platform play, I guess, [00:23:00] uh,

Joe Aamidor: long-term companies can become a little bit hand hands-off of a potential partner because they're looking beyond what does this mean?

You know, we're not just working in busy, we're partnering with IBM. I haven't heard anything specific on, on, on this one, but I know that can be a concern in some cases. Uh, you know, small companies to small companies partnering with each other can be challenging simply because, uh, you know, they're both small, they're both, very cognizant of their position in the market.

They're very much focused on growth, but at the same time, a small company partnered with a really big company that there can be a dynamic where you lose some market power. So yeah, I would think an acquirer would look at that situation and say, look, we have enough existing clients to bring onto this platform will, uh, replace and more any clients we might be losing.

James Dice: Interesting. Yeah. I've just never thought about that until we had this conversation on the air, like that dynamic, so fun. All right. Good on deal. Number one.

deal [00:24:00] number two, um, view buying RX well and IOT. Um, and so could you give us a little overview of what view does?

Joe Aamidor: Yeah. So, so if you makes, uh, basically self tinting windows, right?

And, and if you go to their website, I think a lot of airports, this is, something. Uh, this is a vertical that they focus on, obviously office buildings, but the windows themselves, there's an electric current that can shade them. Right? So you don't need window shades. What's interesting is window shades actually is a fairly significant business alive, a lighting controls companies, own window shade companies.

Um, There's a balance between, especially now you want more daylight, but you want people to be less light means you're probably less productive. Natural light is obviously good, but too much light and, and your building will heat up and then you have to cool it more, uh, in the summer in, in particular. Uh, moreover if you just look at new buildings being built, it's all, a curtain wall system.

But the walls, basically our windows, the extra [00:25:00] is that is, um, so, so view has been around for a while. They went public via actually a SPAC maybe last, well, it would have been maybe late 20, 20, early 20, 21. Um, and that business is. I would argue somewhat dependent on construction, uh, replacing windows of an existing building while I'm sure that's doable.

A lot of new buildings for new expansions of buildings. That's where you're going to see new windows. Um, so the, the website also there, there's an image. I remember, you know, when I was writing about this deal in my newsletter, um, and. Made two acquisitions, but there's kind of an image where the windows themselves can show images.

And I think there's one on their website where it actually shows almost like an aquarium setting in a conference room. Uh, so the windows could do a lot more, right? Like you could argue, uh, this is get the windows in, you know, deliver a benefit on, we help with daylighting, which workers like we also though can help with cooling.

Um, and less [00:26:00] components that can break or that need maintenance around window shades. But once you have the windows in, look at everything else we can sell to you. Look at what else we can do. I think what's happening here. So RXR Realty, big realtor or Realty company based in New York, a lot of offices in New York, very much forward looking.

Uh, you go to conferences and somebody from RXR will probably be there speaking. Um, they actually started their own kind of. Business, if you will, within there, they had a platinum up opera called works well, which was really a workplace solution. Uh, didn't have its own sensors, as I understand, but would integrate with sensors.

And the whole idea was if you're in our building or you're in a building, you want to interact with that space from change settings in a room, find a space, book, a space, they have a platform to do that. And, uh, I ODM more of a, kind of a data play within buildings, getting data out of buildings, serving it up in a integrated way.

I think James, you have good knowledge of IOT, but what this [00:27:00] generally looks like from my point of view is one view is, is trying to expand on what do we do with the windows beyond just helping with shading and helping with just the. Comfort in the space and efficiency of the windows, uh, which is obviously a strong, compelling value prop, but more you can do there, but they looked at this and said, look, we need some components.

We need some capabilities, touching the employees, touching the occupants, touching the tenants through works well. It makes a lot of sense IOT and probably gives them some of that data infrastructure. They need to bring all this together. And I would also say more broadly. I would assume they view where they're going as somewhat white whitespace right.

So there's no, it's not so much. We're buying these companies and we're going to go compete with this large company. That's already dominant it's white space and they're trying to be more dominant. And I think that's a general theme. I'm also seeing when, when you look at smaller companies, buying companies merging their view, I believe is there's white space here.

We want to be in a good [00:28:00] position to take advantage of that way.

James Dice: Hey guys, just another quick note from our sponsor Nexus labs. And then we'll get back to the show. This episode is brought to you by nexus foundations, our introductory course on the smart buildings industry. If you're new to the industry, this course is for you. If you're an industry vet, but want to understand how technology is changing things.

This course is also for you. The alumni are raving about the content, which they say pulls it all together, and they also love getting to meet the other students on the weekly zoom calls and in the private chat room, you can find out more about the course@courses.nexus lab. Start online. All right, back to the interview

Yeah. Th the thing that I thought of when I saw this was first, like you just said, they're mostly. Playing in the construction or like large renovation area. And these are two companies that are playing in the operation of the, of the building area.

And so it's like, what, how can we be a bigger part of the building's life cycle? Right. [00:29:00] Um, but I guess this fits another trend. That's just like a pet peeve of mine that I think people have seen me write about me. Send me, you heard me talk about, which is we have a device company. If, if things are growing where everything is connected and everything's connected to a central platform, the biggest thing we need is all of the devices in the building, which smart windows are just like one of 40 different types of devices in a building.

Right. And if you look at a portfolio of buildings, you have 10, 20. 30 different ones across the entire portfolio for each of the individuals silos, we call them silos and the foundations course, I think the best thing is that every individual device company makes their data available in a way that the centralized platform can ingest it and then makes their.

Controls capabilities available to be commanded from a central location as well. So it's more about [00:30:00] interoperability in my mind and what I feel like we're seeing this trend that makes me mad. It's like the device company, doesn't say. Hey, we need to make our data more available. The device company says, Hey, we need to get a more dominant position.

We need to swallow up more of the smart building stack than we current than we used to have before. And so that's like my rant that I like to say because I would call out density here as well. Density is the same way, whether they're an occupancy counter.

Joe Aamidor: Device, right. Of course, sensors to measure movement and,

James Dice: and they have a full stack, so they can get the data to the clouds, to the analytics consumption, right.

That the people counting analytics, but what they're doing is like, or acquiring helix, right. As one of the acquisitions that they've made recently

Joe Aamidor: is this suffer application. I think not nasty or naughty.

James Dice: So they're trying to become more and more a full-stack company than they were before, rather than just sticking to like, Hey, we're going to count [00:31:00] people and we're going to serve that data up to whoever needs it and whoever can function with it the best.

So what do you think of my, of my sort of pet peeve there?

Joe Aamidor: I think it's an accurate observation. I think there's interesting dynamics at play in the market where this market is, you know, of course, but the viewers may not. You've had very much. A market of closed ecosystems and even back net, which is the core building automation protocol, at least the, probably the number one in America, maybe worldwide, but especially for large commercial buildings.

I mean, being on backnet doesn't mean it's a hundred percent open, right? Um, there's still all kinds of ways that, you know, going into a building that has a backnet building automation system, it doesn't mean it's just plug and play. The analogy I like to use is if you buy a peripheral for your computer probably has USB or now USB-C.

It's not like, oh, but this might not actually work with mine. I have to go hire somebody to help me figure out how do I get my camera to work with my computer. Yeah. But that is in some ways, [00:32:00] even with the standards, how it works in buildings. So there's a long history of this. I think there's a lot of interest on the part of the buyers to be more open or to have more open options.

But at the same time, their existing real estate probably isn't that open. Uh, which might lead them to find the vendors that have already installed their solutions to help them, you know, open them up or just help them just expand what they're doing. It's a challenge. And I think other vendors would look at that situation, say, oh, look, having your own staff, having your own kind of closed or somewhat closed stack.

There's a lot of advantages there for us, right? We, once we have to take this and now we have our windows in the building, the windows are not being ripped out in five years. The software doesn't work as well as they want, you know, much like building automation systems. You're rarely just ripping a building automation system out because you want a better interface.

There's other reasons you're going to update your building automation system is probably not because of terminal. So, so on and so forth. Um, So [00:33:00] I share your interest in getting to a more open place. It's interesting. I've done some research on the European market. They use KNX as a control, one of the standard control solutions, uh, automation systems.

There's a lot of reasons why it's just much more open. Uh, I won't go into all the details, but it's, it's actually is close to this puck plug and play, example I give, uh, you know, you buy a product that's on KNX. You have a building that's running. You actually can, everything just works. So there's an animal I gather you can point to, to say, look, this is good for the market.

Um, but I

James Dice: think what you said before we hit record, that's not a good, like they'd rather have recurring revenue rather have a software company evaluation.

Joe Aamidor: Well, that that's another one. Right. And I don't know specifically for you, but selling. Uh, a hardware, hardware equipment. One, if you're tying your wagon to construction, as there's more or less construction that can [00:34:00] make your earnings look kind of up and down.

Um, additionally, if most of your revenue is for selling the equipment upfront, there isn't that recurring revenue. There's definitely a premium on recurring revenue businesses just we've seen that across the board. Um, and you could say for good reason, uh, So for companies to say, we want to have more of a recurring revenue component, I think is a hundred percent natural.

Uh, and in buildings, you know, historically there hasn't been as much recurring revenue, a lot of building automation systems, you buy them up front, you have them for 10 years. You're probably paying for sure. But the services is not really recurring revenue in the same way. Software is right, because you actually are rolling trucks.

You're actually have people they're servicing the buildings. The profit there won't look as lucrative or won't be as lucrative. Um, so I think that's natural, but that is another kind of undertone you can take from this. Uh, they're looking for maybe just, they want more recurring revenue.

And then maybe in the future wants to be considered or thought of more as a software company. [00:35:00] Yep. Yep.

James Dice: And I think from a software company standpoint, the group they bought at RXR, they've produced some really interesting stuff. Like I remember there were the first one, the pandemic that like came out a couple months after COVID hit and it was like, we have this app built and it can adjust any sensor data and do all this stuff for the user.

So it does seem like they have. A lot of capabilities there that they might have

Joe Aamidor: purchased from the software. I had met some of the team at, um, uh, conferences, you know, going to conferences like real calm is a great option. Uh, definitely thoughtful. I think coming from a real estate company is a really good, uh, way to validate what you're doing.

Right. You actually have people who are using this solution. I also think, um, it looks like RXR actually invested in a pretty big team, you know, a dozen, two dozen folks to work on the software side of how do we build software to make. Our real estate, um, uh, run better. Uh, you could [00:36:00] argue, make the argument that having that type of capability within your real estate company moving forward, right.

With a more flexible use of office, a little bit of uncertainty around, we know how many people come back. When did they come back? What does that look like? That could be an interesting, uh, piece of our skillset, if you will, to have within your office or your company. Um, so yeah. Awesome.

James Dice: Yeah, I met, I think it's Cory from RSR

Joe Aamidor: product.

That's great. Yeah.

James Dice: Yeah. He's great. And he's a, he's a listener of the podcast. So if he's listening to this hope to hope to get him on the show and he can kind of set us straight here. Um, all right.

The app .. That they built though, that view purchased is in this next category that we want to talk about the third and this really isn't one acquisition.

It's a bunch of acquisitions. So can you talk about this trend and the workforce platform?

Joe Aamidor: Yeah. So generally it's funny before the pandemic, a lot of people were talking about tenant amenity apps, and I don't think that's a bad term, [00:37:00] but the idea was. I'm an office worker, maybe I'm, uh, my, my company owns the real estate, so I'm just an employee of the company.

Maybe I'm a tenant, but this idea of can we improve the experience in your office by an app on your phone? And it might sound, oh, that's just way too simple. The buildings are big and complex. There's actually a lot. You can do. On on your phone, simple things like you forget your key card. Uh, I remember when I was in Australia, I was talking to, uh, I think a chief engineer who said they, they had been trying different types of replacements for key cards from biometric, I think facial recognition on a test basis.

And I think one of the themes that came out of that discussion. Some of these have a 5% failure rate. So that means of every 20 people who are trying to get into the building, one of them will have to go to the front desk and say, oh my, I think it was more facial recognition than thumb. Thumb sounded like it was a little more reliable.

They said like, that's a really big problem. When you have a building that's 50 floor. A thousand people work here, maybe more, if [00:38:00] 5% of them have to come to the front desk for those two to three hours in the morning, I need a third person just to manage that demand because obviously we've all been to offices for meetings.

You check in you, maybe you can do it. You do a pre-check now, so you get it more quickly. That was notably, uh, costly. And. And enough for them to say, you know, we don't want that, but people do forget their key cards as well. So if you can put that on your phone, that makes sense. Uh, additionally, I think post or during the pandemic and now looking at what is, what are things in, how do we interact with our offices after the pandemic?

Well, you look at at more of a hybrid. Work-style where you don't have a desk. You can just book a desk. Well, if you come into the office, do you want to book the day? By using your laptop and opening it up and finding a place to work. Do you go in the night before I've seen this where you can go in the night before and reserve a desk, really doing it on your phone makes a lot of sense.

And then even just finding a conference room, you go to an office for the first time or a floor on an office. You haven't been there before, just being able to find [00:39:00] where you're going. So there's a lot of reasons that, the phone itself can be a nice. For making the office a little bit less, challenging to use, uh, you also before the pandemic, I mean, there were all kinds of cases.

I'd go visit clients and finding a conference room was really challenging. Just you find a conference room, uh, on the system, right. You book it and then it takes you five minutes to get there. And in some cases you didn't get there within five minutes, you lost the booking. Um, so there's just all kinds of reasons that, uh, that was maybe a critical touchpoint.

If we don't have assigned death. Every think back to before the pandemic, when you had meeting after meeting and conference rooms, you were trying to book conference rooms, somebody came and talked to you and you realized, wait, I have half an hour, let's go find a conference room and whiteboard this out.

Well, we have to find a room. You could argue that's going to happen on a much more, uh, smaller basis for every single desk in an office. I don't think it will be that, that frustrating every, every day for every employee. But it's the same idea if you're trying to find a desk for today or for this [00:40:00] morning or this afternoon, Having data to point you where to go allow you to book it Aleida to use.

It makes a lot of sense. Um, so that's generally the workplace category. You also have maybe related to that this integrated workplace management solution category Jyoti includes those elements includes elements of a CMMS. Uh, computerized maintenance management system kind of work order management, uh, can include asset management can include a whole host of different things, guest management.

Right now you have solutions where you come to visit an office. You can just sign it on a, on a tablet, especially coworking does this lot. Automatically sends an email or a text message to the person who you're meeting they'll come and get you. It's all very automated, right? It works well for everyone involved, I would argue.

So there's all kinds of solutions or apps in the workplace. Um, and you're seeing some consolidation here. Generally. It's a pretty open white space. Um, there aren't a lot of modern workplace. Uh, platforms that if you looked five, 10 years [00:41:00] ago were dominant in the market. You had, again, CMS has been around for a long time, but that was really more focused on the facility staff, not the users of the space.

Um, so I think there's a lot of deals here simply because. This is viewed as very much a white space. There are companies that are touching the workplace or are in the workplace and we want to grow beyond it. And they're all merging making acquisitions. We'll get to some of the details. So.

James Dice: Okay. Yeah. What are some of the companies that have been doing this?

I mean, we just talked about our XR and view. That's added to that's one that fits in this category. What

Joe Aamidor: else? Um, so VTS is more of a, they started, uh, there was actually a merger between, I think Hightower and BCS years ago. It was kind of one of the first, really big success stories within PropTech.

Morbark. Um, so they're more of a, kind of a platform for real estate more broadly, but they bought two companies. One was rise or rise buildings, and one was lane rise buildings, uh, [00:42:00] earlier younger company, but had some elements of this workplace, you know, workplace tenant management, and then lane was one of the leaders, at least from my view as an outside observer of just the app that the staff could use.

To interact if you will, with their office space. So that was one HQO, which was maybe the company that, uh, was most notable within the workplace category. Um, we sell to companies that want to deliver an app in a technology enabled interface for all their employees. Um, they bought a company office app, which was European based.

So that was again, similar capabilities, just trying to expand, um, space IQ. So space, like he was interesting because. Archibus very old, uh, a well well-known brand within more CMMS, but asset management, I think a lot of their legacy business is still on premise. They, I think merger acquired space IQ kept the space at QA and they also bought Sarah view, which was again, platform again in this workplace space.

Um, they [00:43:00] merged with I office, which was also a pretty well-known fast growth IWMS. So they merged together. So you have a lot of different companies. Um, kind of focused on this space in one way or another. Um, but all I think looking at this is a category. The other thing I should note you have.

Corporates just hiring workplace staff. You had a real estate team, you had a facilities team, maybe you're growing your workplace team. there's components, uh, on an HR point of view, a better office attracts better employees keeps, you know, helps with retention so on and so forth. But how do we actually operate that space?

Uh, and then there's even questions, you know, how much space do we need? Well, we need data to inform. There's also the CA the trend of we want our space to be used more flexibly moving forward. So if we notice after six months, an area has really poor utilization, maybe we redesign it. And that, of course, there's a physical change.

But using data. Um, I think the old way you might actually hire a consulting team, a consulting staff, or consultants to come and actually [00:44:00] sit and observe. How has the space being used? We'll be here for the week. We'll take notes. We'll just sit. We'll observe. That's not a completely obsolete, but having data to match up with that can be useful.

Um, so there's a lot of places that the word. Uh, technology or workplace platform can go. And I think all of these companies view it as one. We want to reposition ourselves as not just a CMMS, maybe not even just an IWMS. We want to be from a more next gen workplace platform, but they're also looking at each other and looking at the space, the market and saying, you know, we want to beef up.

We want to be a little bigger.

James Dice: Totally. Yeah. A key theme I think in this area is. This, maybe, I don't know where I got this from front of the house and back of the house. Right. So when I had Darlene. On the, on the podcast six or so months ago, she talked about how plan on which is an IWMS is really trying to bridge that gap.

You know, they're doing the occupant facing app, but then they're also doing the CMMS. Um, [00:45:00] more back of the house can be maintained, this thing better. Um, and IOT data kind of sits on that back of that. Set up things, system data, building automation, system data, like where nexus typically plays kind of sits on that back of the house.

But I think a trend here is that a lot of these companies are kind of bridging that gap and saying, well, what about platform that runs the whole, the whole thing. Right? What do you think there? Do you think there's like a actual dichotomy there? Or do you think like, do you see. The front of the house and back of the house, like merging together

Joe Aamidor: over time.

Yeah. I think this is one area where it's actually logical for that to happen, partially because a lot of this software is already in the cloud or is moving to the cloud. A lot of it is. Uh, you know, when I think of the challenges in more of the traditional smart building space, you might have an on-premise building automation system.

That's 10, 20 years old integrating and getting data out of it is actually pretty challenging. I think [00:46:00] when you look at a CMMS, they could be on premise, of course, but they're moving to the cloud asset management, same thing, IWMS a little more, I think cloud native or, you know, the companies that seem leaders appear to be leaders are in the cloud.

So being able to pull together a variety of cloud apps, I believe is a little bit easier than well, every building we go to the integration and implementation process is going to look completely never because you don't know what method or vendor your building automation system is. So, um, you also can argue front of the house and back of the house.

They depend on each other, right? The back of the house is there to make the experience at the front of the house. Better. The same time you can make it better. If you can get more details from the front of the house on what do you want, right. If you give the opportunity for a tenant or maybe it's tenanted space, but I'm the one who kind of runs the office, right?

I'm the office manager. I run. If I have a way to provide feedback, to, uh, not have to call somebody every time I need every single thing, I can use an app for something.[00:47:00] That also is beneficial for their, for them as well. So this is one area where I. Bridging the gap between those use cases or those ways maybe what is right now, individual modules make sense.

What I would also though say is there are just a lot of companies, in addition to those acquisitions, those mergers, we saw Envoy raise in January. I mean, you know, they raised a 111 million, um, office space is another company they've been around for a while, but they raised, I think 150 million. So these are really big rounds for companies that are making maybe not what they would think of a smart building software, but really, you know, real estate operational software that's data-driven sensor-based.

So there's a lot of companies that are fighting and will continue to fight for this space. And then you look at a Siemens, they bought comfy a couple of years back comfy has a lot of these same characteristics. I know I've seen press releases from JCI that they have a tenant engagement app. I think Schneider.

Has invested here as well. So there's a lot of different companies that are coming at this, [00:48:00] uh, Envoy, for example, they started as more of a guest management system, right? You come into the office, you want to meet with somebody, you sign in on the app or on the tablet. It's about probably a tablet. They saw that as, as one place and now they're expanding.

So there's just a lot of money there. Uh, I've talked to some facility management, uh, consultants and just contacts that have. One challenge is that a lot of buyers, you know, head of workplace, head of real estate, you might be buying technology without necessarily having a good sense of what is the problem you're trying to solve.

I also recall last fall going to a conference, speaking to a couple of these, um, I think it was a cornet conference. It was a lot of corporate real estate staff. And one of the things that was notable from a few of them was, you know, we're doing a survey every month, every two months, every three months for all of our employees to figure out when do they want to come back?

What are they comfortable with? W, what does it look like a day, a week, two days a week, three days a week. And you you've seen more broad industry wide surveys as well. But what I heard from a few different, uh, corporate real estate staff [00:49:00] was whatever they're telling us, our employees, and we survey them a lot.

We don't even get close to that in reality. Right? So if ever if half the people say they want to come into the office, 1, 2, 3 days a week, we're seeing almost no one come in even one day a week. Of course, the pandemic has clearly impacted what people want to do in the future near future and what they feel comfortable doing, and that will likely change.

Um, but you could also argue, I mean, it's good on them for doing the survey data. I think that's a, a very much, a, a best practice to figure out what kind of workplace software do you need to buy. But there's also some uncertainty there that, that makes it hard to, to know what you want to buy. Uh, but you are going to be hearing from a lot of these companies because you know, those are huge.

Yeah, those are huge

James Dice: rounds. And they're also like in order to get that much capital, you have to have a certain amount of traction to even start. Right. So it seems like I w I'm struck by the word that you use white space, given how many companies there are and how much assumed traction they must have.

[00:50:00] Right. Um, I think rise got bought by VTS for like a hundred million, if I'm

Joe Aamidor: correct, but I think it was disclosed. I think it was, yeah. So back end

James Dice: of that, back into the revenue per square foot, like you give back and had a pretty good, they had a pretty good traction before they got bought and that's just one company.

So it just seems like there's some good momentum here. Cohesion cohesion is another one. Right? So cohesion just raised a pretty big

Joe Aamidor: series. A they're kind of hybrid between a smart building platform. Having some tenant amenity capabilities. I think a digital twin capability. Um, what's interesting to me

James Dice: here from an integration standpoint is that you can start down this road of tenant engagement, occupant engagement, and not have to integrate with anything until you start to, you know, you could do room booking, you could do visitor management, you could do a lot of stuff.

Until you get to the point where you need to mess with access control systems. Right. [00:51:00] So like, I think just send it talked about there being a good roadmap here, which is like, there's some easy to knock off things. Right. And then there's access control systems and those are their own sort of animal.

Right? Yeah. And so it seems kind. Yeah, but that, it just feels like it's like the gateway into the back of the house. You know, you start to mess with access control, elevator control, you get into temperature control for the tenant. And now you're fully into this back of the house platform. Once you start to enable the more and more use cases.

Joe Aamidor: Super interesting. The workplace platforms, I don't think have really moved like fully back of the house. I think work order management is probably the simplest place to start with. If you think of that dichotomy front of house, back house. I think we'll see more of that without a doubt. Uh, I also think to your other point, just to maybe put a bow on this, this, this category, I think we're going to hear a lot [00:52:00] more, so this is a topic we could probably revisit, you know, if we do another, when we do another one of these podcasts, there's just one very high valuations.

I would argue they're the valuations of these companies is probably even a little more elevated because there's just this. People are going to spend a lot of money to bring their employees back. Uh, there's going to be a surge maybe even for multiple years. Of spend to improve the workplace experience.

And these companies are well-positioned and also dressed capital providers say, yeah, we like this trend. We want to be involved. We want to ride this wave. Uh, we'll see how it actually plays out. Um, but I, I tend to think that's driving some of that. Uh, and I would also say, uh, maybe right before the pandemic, this was a white space and now it's actually very quickly become, not so much a white space, but, uh, you know, somewhat fragmented though.

You could point to at least a handful five, 10 companies that most likely will be in, uh, you know, influential, insignificant in this market. Yeah.[00:53:00] Fascinating.

James Dice: Well, that was fun. I had a lot of fun.

Joe Aamidor: I learned a lot. It's fun to talk about this, and to share it with the community. And to anyone who wants to listen.

Yeah,

James Dice: and we're going to post this on LinkedIn. So Joe and I would love to see feedback. You think we're full of shit? Let us know. You want us to do this again? Let us know. Um, so Joe, do you want to just conclude for us kind of like kind of what are the overall trends you're you're thinking about

Joe Aamidor: right now?

There's a lot of big trends around real estate. Uh, bringing people back to the office, using our space, more flexibly, uh, better data about how the space is being utilized will become more important as it's being used less consistently. So platforms and technology and software and sensors that help with that theme are very, very, of high interest from a lot of different.

You're also seeing energy management ESG continue to become a, a big deal for a lot of corporate commercial real estate firms as well. Um, so a platform there makes [00:54:00] sense. And I would say, uh, you know, PropTech, we haven't talked about this a lot, but generally prop tech is an area where there's a lot of opportunity to digitize, to change paper-based and manual processes into if not completely automated, somewhat automated and augmented between technology and staff.

So there's a lot. If you will mega trends. I don't use that term often, but mega trends that are driving interest in buildings and how we use our real estate. And that's leading to investment in technology. Uh, you're also seeing a whole host of different companies from big companies trying to buttress capabilities they have today.

Smaller companies that say, look, if we work with or merge with this peer of ours or acquire this peer of ours, we become a bigger player. We become more significant. that allows them to establish something of a beachhead. there's just a lot of new categories. I think the level of innovation.

We didn't really talk about indoor air quality, but now you can buy sensors that can just very accurately monitor current, indoor air, from VOC CO2, which can be a, uh, an analog for ventilation [00:55:00] temperature. So on and so forth. We have data and research that people work better are more productive when the spaces is a healthier space, same way that space utilization sensors.

I remember back when I was a product manager, even 10 years. We will amend it. How man, if, if we knew how many people were in each room or in each floor, we could do a much better job of building, model for measurement verification, right? We could actually, you know, with those data, whether plus occupancy, that gives you a more accurate model, which you can then use to quantify the savings of any type of project you implement or ECM you implant.

So, um, now we have that capability, right? Th those are real capabilities that, that. Viable in the market work well. Um, yeah. there's areas where you can do things now that you couldn't do in the past. Uh, but some of those are more on the realm of a point solution that I think will be part of a bigger solution.

Um, I also just lastly say there's a lot of acquisitions. I mean, I have the newsletter, I have a list on my website of just all the acquisitions I track over the, been doing this now for five or six [00:56:00] years. There's certainly, uh, a lot of surprise that I see where I, I see. Wow. You know, I didn't expect that. I think we'll see more of that. I think we'll continue to be a little bit surprised.

James Dice: Awesome. Well, thanks, Joe. Yes. And, uh, hope we can do this again. Uh, thank you for the

Joe Aamidor: insights. Thank you, James.

James Dice: All right friends, thanks for listening to this episode of the Nexus Podcast. For more episodes like this and to get the weekly Nexus Newsletter, which by the way, readers have said is the best way to stay up to date on the future of the smart building industry, please subscribe at nexuslabs.online. You can find the show notes for this conversation there as well. Have a great day.

James Dice: r