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"Why would you get something that tracks consumption but doesn't include fault detection and diagnostics? Something that doesn't also include predictive analytics and performance optimization?"
—Ryan Baxter
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Episode 104 is a conversation with Ryan J. S. Baxter, PropTech Advisor at 5, where he consults with the New York State Energy Research & Development Authority, AKA NYSERDA.
We talked about how New York City real estate is unique, the top 5 pitfalls for technology vendors trying to get a foothold there (and anywhere), the past, present, and future of NYSERDA’s Real Time Energy Management Program, AKA RTEM, and finally, the exciting Hackathon initiative the RTEM launched this year.
You can find Ryan on LinkedIn.
Enjoy!
Music credit: Dream Big by Audiobinger—licensed under an Attribution-NonCommercial-ShareAlike License.
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!
[00:00:03] 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.
[00:00:31] James Dice: This episode is a conversation with Ryan Baxter. Who's a PropTech adviser to the New York state energy research and development authority. AKA NYSERDA. We talked about how New York city real estate is unique. The top five pitfalls for technology vendors, trying to get a foothold there and anywhere I would add.
And then the past present and future of NYSERDA is realtime energy management program. AKA R. And finally the exciting hackathon initiative, the R 10. [00:01:00] Team launched earlier this year. So without further ado, please enjoy this episode of the nexus podcast with Ryan Baxter. Ryan, welcome to the show. Can you introduce yourself?
[00:01:11] Ryan Baxter: Absolutely excited to be here. I'm Brian Baxter. I wear a few hats, but most notably I am PropTech advisor to the New York state energy research and development facility of role. I like to refer to as prop tech center
[00:01:28] James Dice: and that costs, okay. You have to explain
[00:01:30] Ryan Baxter: that.
Why didn't you refer it to that chorus? And so my role at NYSERDA has largely focused over the last four years on designing and implementing the world's leading PropTech incentives. Um, Part of that entails hoping nicer to determine what's naughty. And what's nice as it's building up over the last few years, I've been able to parachute my [00:02:00] way in to over 300 building upgrade projects, impacting over 140 million square feet of office and multifamily in the five boroughs over a quarter of a billion dollars in total project costs against which I started has approved over 44 and a half million dollars in incentive PMs, 10 cent.
[00:02:26] James Dice: Uh, I love it. We're going to dig into NYSERDA a little bit and, and NYC a little bit. I'd love to hear the first, like before you got to this role, what's your, what's your background?
[00:02:38] Ryan Baxter: Sure. And so I had a non traditional routes, prop tech. It really started well. Uh, lobbyist for the real estate board of New York, a role I feel I was born for because I grew up in Midtown Manhattan on 57th street in a 50 story apartment [00:03:00] building.
And so, and so from the time I was a young child, I've had a deep resentment for buildings with fewer than three elevators. And so I became a lobbyist to spouts pro growth pro to Beltman advocacy because ultimately I would like to see New York city reach its potential so way more housing and ultimately become the greatest city in the world.
And so I spent, I guess it feels like a lifetime ago, but I spent six years as a lobbyist at REBNY there. I worked on everything from. Affordable housing incentives to sustainability, to technology initiatives. And I really got a sense for prop tech. When I was leading a campaign to enable Kogan in the city back before it was a bad word back before [00:04:00] we felt so strongly about onsite fossil fuel use.
But in the before times, there were a number of revenue members who were looking to improve their marketability and operations through Kogan inflation, but con Edison and other utilities had been the public service commission, which regulates all utilities. Now running codec plants is super hard and not only should kind of be the only.
Entity that runs them. But you know, if we were to allow everyone in anyone to run them all privately run, cogent plants might fail simultaneously, which is why they were able to convince the public service commission to allow the standby terrorists, how much you paid for standby power to exceed the cost of how much you would pay for power creating this meaningful [00:05:00] disincentive.
These installations, Hudson yards is cogent plants that really forced this to rev needs priority list. I was able to break a 10 year backlog within re taste proceedings to create regulatory release that benefited them and a number of other installations. Related to cogen plant has been profitable from day one of operations.
And that was when I had this Eureka moment, like, wait a minute. There's technology that makes real estate more viable, more attractive, more than it would be otherwise. And that started me down the path I've been on ever since.
[00:05:49] James Dice: And you go right back real quick to why coach ends at that word today. I just want
[00:05:53] Ryan Baxter: you to explain that to people.
Sure. And so we now have to focus not just on [00:06:00] efficiency, but de-carbonization and burning fossil fuels on site, even if you were doing so to create electricity and cheap more efficiently than you would otherwise be able to access those resources. It will not a great way to reach our climate goals. And so increasingly for the last I call it eight, 10 years in particular, there has been a movement away from onsite fossil fuel use and in particular coach and installations.
Got it. Got it.
[00:06:36] James Dice: Okay. So you, you were a lobbyist and then, and then
[00:06:38] Ryan Baxter: what, so going back a few years, I was reading the tea leaves and it seemed like it was about to be a very bad time to be a real estate law. If he like between a number of policy priorities and a growing sentiment towards a more democratic [00:07:00] approach to politics, I didn't want to be in the danger zone anymore.
I hung up my lobbying career after. You know, writing city and statewide law, helping bring about tens of billions of dollars in economic impact. But I wanted to find a way to maintain my relationship with a lot of these real estate companies. I wanted to find a way to pursue work that made me feel better inside.
And so on my way out the door, I was able to do some lobbying on my own behalf to convince NYSERDA that they should hire me as their real estate whisper. At the time they were struggling a little bit because they had just launched the clean energy fund, a brand new $5 billion initiatives, and in, so doing, they [00:08:00] had to terminate all of their existing programs.
You know, there are a lot of real estate companies who were. Unhappy with that choice. They believe it complicated. My cert is ability to drive adoption of its new incentive programs. And so I was able to convince them that with my assistance, we could resolve some of that market perception and meaningfully increase participation in new programs.
So I've been profit tech advisors since the end of 2018 prop tech
[00:08:36] James Dice: adviser, Santa Claus and real estate whisper
[00:08:40] Ryan Baxter: all in one
[00:08:44] James Dice: nice personal branding. I think they call that. That's great. Um, so I'd love to start this conversation off with just NYC as a whole. Can you talk about what makes, uh, NYC real estate, the real estate they're [00:09:00] unique in that marketplace
[00:09:01] Ryan Baxter: itself?
At its core New York city real estate is unique because of New York city history. New York city is arguably the most important city in the world because it has been first in so many regards, New York city invented American capitalism. It invented multiculturalism. As we know it, it was the prototype for industrial transition into a service economy.
And ultimately that has led to a lot of inflated egos, which is understandable. But within the real estate market, one of the most distinguishing elements is who owns what by that, I mean the largest owner of real estate in city of New York is the city of New York or municipal governments. And while that might not strike you as all of that odd consider.[00:10:00]
That the municipal governments, annual budgets here in New York city is in fact larger than the next 19 largest us city, government municipal bugs budgets, combined, combined. It's the massive player. And ultimately some of the most renowned real estate companies in the world, some of the largest in the world we own and manage a fraction of what the city of New York homes.
And so that dynamic is unique. Similarly, we have some strange elements to our market that kind of go against some of the fundamentals of real estate. As most of the world would know it. For example, we have basement windowless space in Midtown Manhattan, that leases for more per square. Then the [00:11:00] top of Willis tower in Chicago.
And you're like, how could that make sense? But it has a lot to do with the fact that our city limits haven't grown since the 19th century. And so we've always had very little land with which to develop and market, and that in turn has increased how much it costs to pursue real estate here. For example, you have talked a lot about the 3 3300 rule with a number of years guests, but wouldn't, you know, it, we have at least two office buildings today in Manhattan that are charging $300 a square foot in rent.
So the whole paradigm. Exactly. We do things a bit differently here, and it [00:12:00] has put New York city in a space where we are the exemplars of a number of things, including the disconnect between landlords and space users. COVID was a huge wake up call in that regard because there are presumably millions of New York.
Who feel their window ventilated apartments are somehow better ventilated in their office building. And it speaks to a lot of the complacency we have here. That's unique here because for decades and decades, you could get a 25 year lease signed pretty, not have to worry about your asset or what's going on in it at all.
Maybe you did a pneumatic control upgrade wasn't by the time that you're just sitting pretty on a beach somewhere, and now we're seeing a movement towards providing a space that is much [00:13:00] more supportive of users. One that's much more focused on occupier or space, user comfort, wellness, productivity. And I think that's where, you know, shout out to Ann Lapsley and the environs suite.
But that's where indoor environmental quality is really taking off. And again, where New York city is unique from just about anywhere else in the world. We're going to be at the forefront of all of those improvements. I love it. As
[00:13:34] James Dice: you're talking about that, we're hearing all this honking going on background too.
It's just, it puts it right into the perfect setting as you're explaining the city. And, uh, yeah, and I was there a couple of months ago and I just loved walking around thinking about all these changes happening in the midst of all these massive historical
[00:13:53] Ryan Baxter: landmarks. Really. Um,
[00:13:56] James Dice: you, you've sort of been this prop tech world and said, since you said you [00:14:00] sort of transitioned into this Santa Claus role, how about when, when that history intersects with technology and how technology sort of, um, available to help with this transition?
Right. What have you seen happen so far as these New York city landlords and building owners have started to implement technology? Has it gone? Well, it has it good. Not so well. What's been your assessment.
[00:14:29] Ryan Baxter: Yeah. And so I am a bit biased, I suppose, but it does strike me that when a technology becomes expected, New York city landlords are first to getting the best and brightest put into their buttons.
A wonderful example that folks regularly exclude from prop tech or elevators. We have some of the best elevators in the world. We would see landlords modernize their elevators [00:15:00] with great regularity without much hubbub or struggle. However, When it comes to less established companies, particularly prop tech startups, there are a number of pitfalls that I feel has created this perception that New York city, real estate hate prop tech hates technology dinosaurs.
That can't be bothered, but you know, a lot of it is just a fundamental misunderstanding of what's driving decision, making those statements. So the top five pitfalls I've seen in my prop tech experience, most startups are a list them, and then we can touch on each one quickly. Number one, this is something you've talked about a lot.
They don't know what problem they're solving. Number two, they don't know who to pitch their solution to. Number three, they don't know how to pitch their solution. Number [00:16:00] four. They don't know what to request from their pitch. Number five, they don't know how long it will take to drill into the issue on the, those quickly on not knowing what problems to solve.
I can't tell you how many awesome entrepreneurs I've seen decide. Hey, Microsoft Excel sucks. We need a purpose driven,
kudos having passion and wanting to do something. But if you are just doing something because you can, that's not a great way to market yourself in New York city real estate. And so the five business cases, the top five business cases I've seen, prop tech are unlocking new revenue, improving operational efficiency, improving customer satisfaction.[00:17:00]
Enabling process automation and improving data management. If your solution isn't doing one or more of those five, you probably aren't going to do well. Which leads into the next pitfall of not knowing who to pitch it to. A lot of folks are like, oh, I got to pitch the CEO. I got to take a top down piece.
We'd approach marketing my products and services. And that's understandable because it seems like a more straightforward approach. But if your product is to be used by chief engineers and you're pitching the CEO of a real estate company, you're going to create a lot of pension unnecessarily. And so knowing we include a pitch based on what your solution is and who benefits from it critical, but that's not enough because once you know who to pitch, you gotta know how to pitch.
And so being able to speak to the [00:18:00] specific priorities of the target you have in mind is key. A CEO might be more interested in improving the culture of their company than the cybersecurity which they put on the CIO CTO. The asset manager might be focused on NOI overall. The property management chair might own care about tenant experience.
Your chief engineer might only care about improving. Time efficiency of their work. And so being able to relate your solution to those priorities in multi-language that matters to the user super key. Yeah. We're real
[00:18:41] James Dice: quick. We call that in our, in our course, we teach similar mindset, right? And we call it the layers of value proposition.
So you might start with one stakeholder and what their key value proposition or their key driver would be. And then you have to look at all the different layers of the organization and dislike turns into [00:19:00] what some people called layer cake. But I don't, I don't really call it that, but yeah, the stacking, the layers on top of each
[00:19:06] Ryan Baxter: other, basically I liked that.
I liked that a lot. And then for the folks who are successful enough to have their cake, another huge pitfall is not knowing what to ask. You've gotten all of the yeses and support you feel you need, and, you know, The startups out there asked for the moon. They want to deploy across the entire portfolio.
They want an equity investment. They want someone to join their board. They want to be able to market everything as a case study of all the way. And you know, in individual instances, individual last can make sense, but there is not nearly enough time to prioritizing what's most important and you know, starting small and then scaling is always a better approach than asking for everything.
Because the last pitfall of not knowing how long this stuff takes, you get everything [00:20:00] right. You, you have a real value prop. You pitch the right people in the right way. You've asked for something that is more easily implemented than others. And so you. Audrey good to go. But then, you know, you follow up every week for eight months, not making any headway until you finally are of the mind that up, this was all a waste.
They lied to me. They're not worth my time. I'm gonna move on. But you know, if you had gone in with the knowledge that in New York city, real estate, especially in the energy management space, you're looking at a 12 to 24 month sales cycle longer. If any of your targets transition midstream, you, you would be better able to succeed because a big part of this, the reticence of real estate companies to believe that these solutions that are going to be around for a long time.
And if you can't [00:21:00] inspire confidence that you're going to be around in 5, 10, 15 years, then you're not going to do well. Being able to accommodate a 24 month sales cycle is a great way to differentiate yourself.
[00:21:17] James Dice: Fascinating. I feel like you just gave a masterclass in PropTech sales, but what I like to tell people is that even if you don't feel like you're a salesperson today, we're all, everyone in this, in this industry that listens to this podcast, we're all in sales, right?
We're, we're all trying to change the status quo in some way. And I love those pitfalls. Those are great. Those are great. Can you go back to number one around that? You mentioned data management. I just wanted to pick that up, but I think as an example, how do you make the financial case for better data management?
Like what's the ROI on that and
[00:21:56] Ryan Baxter: how does that calculate. Yeah. And so [00:22:00] this is an area that I think is evolving. It's particularly exciting because now we're seeing a movement towards ESG, unlike anything we've seen previously, where now, if you are unable to measure and monitor your consumption in a granular way, you can't possibly manage it and reduce your carbon emissions.
And so in this particular instance, we're seeing a movement to say, Hey, historically, we haven't cared about a number of these data streams, whatever. We don't need our BMS to talk to our tenant equipment because who cares what the tenant equipment's doing. We get paid just to say, w w we haven't needed.
Computerized maintenance software to talk to anything else, because as long as we are handling our hot and cold calls and making sure we're keeping [00:23:00] everything running tip top, what value is there in consolidating things. But increasingly we're seeing there's time and savings associated with having everything come together in a unified and actionable way.
You, you don't need as much folks focused on as many things. If you can have all the data streams, consolidated and interacting with one another in a more productive manner, that's also where we can start bleeding into the process. Automation value prop more easily because this. You can create a more enterprise 360 platform for every piece of data created through your operation.
Then the idea that you'll have to be as worried about your staff, transitioning and losing some of the operational brain trust that helps you meet your tenant expectations is lessons. [00:24:00] Now, if all of the data's in the right spot, you can begin thinking through the systems and processes that will reduce the need for, you know, the 70 year old chief engineer who shown up building a 4:00 AM every day, making sure everything's working, even though it may not be necessary, but nonetheless has that person has such a wealth of experience in dealing with issues that we are seeing more.
Investments more business decisions being driven by a desire to steal companies against those staff losses and transition. Got
[00:24:43] James Dice: it. Yeah, totally, totally agree. I see that. See that happening elsewhere in New York city though. I'm just curious.
How has are things like efficiency in time savings, like operational efficiency and time savings?
How to, how to landlords think about building [00:25:00] owners? Think about the actual ROI. Cause they're not going to fire that 70 year old guy that's managing their, they're not necessarily firing people when they're saving time, uh, through efficiency in operations. How has that ROI made then? when they, when they sort of go to justify that to
[00:25:22] Ryan Baxter: their bosses,
Leaders of the industry are increasingly using asset value to justify these improvements, because it's not just about what the simple payback is for improvement within the building. It's oh, can I now underwrite at a higher value to make the cost of capital cheaper or to make my asset more attractive to prospective institutional purchasers investors?
That piece I think is increasingly important [00:26:00] because we're seeing a broader industry-wide consolidation. The big folks are getting bigger and what's nice is whereas historically the more ROI driven approach would preclude some of these larger folks from caring about. 90 year old class C office with a average rent roll of 40 bucks a square foot.
Now they're seeing an arbitrage opportunity because if they can bring some of their procedural and process excellence from their class, a office buildings to this class C office. Now that class C office has much more upside and there's a larger potential for them to be able to appeal to ESG minded investors who, you know, want to be able to see very tangibly, how you are reducing the carbon footprint of your assets.
And that's not something that's easy in a superclass they office. Those are running really, really [00:27:00] well in a lot of instances. And so the value proposition to those ESG investors is lessons, but. There are only so many of them and the largest players are increasingly competing with one another to attract interest from those investors.
I am hopeful that we'll see a much more holistic approach to justifying some of these improvements, because if at the end of the day, you're saving more carbon than your competitor. You should outperform. Got it.
[00:27:31] James Dice: Got it. So it's like a direct link between, because we have these technologies installed this asset, it's going to be worth more.
[00:27:40] Ryan Baxter: Is that what you're saying? Yes, exactly. Right. And hopefully in the short term, you're seeing the actual rents increase, but particularly later this decade, I think we'll see, prior to those rents, increasing the assets themselves will be more sought after, by the folks [00:28:00] who have experience with de-carbonization.
[00:28:05] James Dice: Interesting. All right, let's jump in. And I started, can you talk about nice, sorta big picture wise? What, what is it?
[00:28:11] Ryan Baxter: Sure. And so the New York state energy research and development authority was created as a public entity in the 1970s to reduce New York state's carbon footprint and create jobs over the past few decades on everything and anything, energy related from helping with renewable energy, helping with renewable energy credits, every energy efficiency upgrades.
You can imagine it even gets super deep into obscure things like creating wood chips that has less pollutants for folks in upstate New York. We still use stoves and cabins and things, but all of that is to say it exists to [00:29:00] help energy consumers make more. Energy decisions and reduce their footprint. So that as a whole, the state can proceed is funded by rate payers, everyone who gets their electricity from a regulated utility pays a little packs.
We're not supposed to say that, but the system benefits charge funds. NYCERS programmatic interventions, as well as utility modernizing their grid infrastructure. Within next start as a whole, that has many different heads. I spend my time within the market development teams. Those teams collectively spend about $150 million a year to design and implement incentive programs meant.
Raise standards within the industry, get buildings to do things they might not otherwise do. And [00:30:00] typically in a pilot process, because the goal for all nice service programs is to prove the business case from a carbon reduction standpoint for an incentive so that utilities can subsequently scale the programs across their service territories and really maximize the potential savings and benefits within market developments.
We have recently been really focused on energy management technologies. We've been very focused on decarbonization strategies, and we are trying to find ways now to. Move beyond just select the patient because it's not enough to electrify your carbon emissions based static. And so now the name of the game is creating the [00:31:00] incentives to spur more investment in decarbonisation.
And we're seeing that in the form of technical assistance funding necessary to Love's technical assistance funding. If you want to pay an MEP firm to come tell you how to do things, to enable your carbon strategy, I started with love to buy down the cost that more people do it. It becomes more commonplace.
We see more manufacturers begin focusing on the New York market with their innovative products. You know, it's a lot of fun because one of the most. Glossed over aspects of next sort of the value prop is the standards and qualifications. They advanced in each individual program. And so one of the programs we'll dive into real time, energy management was super exciting to me because the team behind it looked at the state of the market and [00:32:00] said, Hey, this isn't good.
A lot of people are buying a bunch of nonsense and we should make it easier for folks to invest in these improvements, by creating a bar and challenging the market to pass our bar, to receive our AR 10 qualification so that the market can more easily differentiate from the many, many products and services.
Yeah, let's do jump
[00:32:26] James Dice: into the RSM program. So I started working with our team, the team when I was at Enrail and 20, 19, 20, 20 timeframe. And to my knowledge, there isn't any other program like. Throughout the world. Um, people might write into me and tell me I'm wrong after this, but I don't, I don't think there is some something that, um, like you said, qualifies and incentivizes, uh, energy management information systems, IE MIS, or analytics, some software, [00:33:00] sometimes people call it.
I haven't seen anything like it, but beyond maybe the, the combat program in Chicago, there's like a little bit of monitoring based commissioning incentives,
[00:33:10] Ryan Baxter: but
[00:33:11] James Dice: it's not the same scale at which you guys are doing it. It's not the same amount of money as how the same recurring revenue that you are, you guys provide in terms of incentives.
Um, so I guess my first question is, am I correct in that? Is there, is this unique, uh, in terms of, in New York and
[00:33:28] Ryan Baxter: not anywhere else? Absolutely. And so to your point, there are. Utility incentives that will touch on similar systems, but none that I'm aware of that we'll touch on as holistic a collection of solutions, our tendons, boats system, and services.
Got it.
[00:33:49] James Dice: Yeah. Let's start with the history of it. So maybe go back to the beginning. What was, what problem was this R 10 program trying to solve you? You kind of hinted at
[00:33:58] Ryan Baxter: it a little bit. [00:34:00] Sure. And so the history of the AR 10 program starts with another nicer to program, the remote energy management program, which I won't touch on too much because it did not do what nicer that I had hoped.
There was this whole idea that we should make it easier for this information be access your consumption data should be more accessible. If it's more accessible, it will be easier for you to use less energy and so on. And ultimately, ultimately that program. This is my 2 cents. My do not. And I started proper.
That program did not hit its metrics in a manner that inspired a continuation of it because a lot of folks would take the incentive, install the systems and the never use it. And so the core starting place for our tent was we need to ensure that the systems we subsidize are utilized and that's where our temp services [00:35:00] came in.
And so the amount on our 10 were eight years ago, I started reviewing the landscape with our 10 technical advisor shouts Thomas EA often guy he's been dealing with automated demand response since the eighties easily. One of the most knowledgeable people when it comes to this stuff in the entire world, he led an effort to review the status quo and came to the conclusion alongside NYSERDA.
Even for multinational BMS and control vendors, the folks most able to sell products into the large New York city buildings that are more clear standards for what customers should expect from these solutions. So you've talked about this, the law. Why would you get something to help you keep track of your consumption that didn't also include fault detection and [00:36:00] diagnostics? That didn't also include predictive analytics and performance optimization? Some of these obvious use cases for the data that's being centralized. And so I started to said, Hey, let's create a new standard through the AR 10 program that says you are only eligible for our incentives for this new descriptor.
If you have a cloud-based platform that can draw. Data in 15 minutes, intervals are better that can produce the observations needed to enable our temp services, which put simply the idea that even if the owner doesn't intend on using the system, necessarily if you are pursuing an art 10 project, there will be a vendor required to use the system for at least a year, so that we don't end up with orphan technology as we have in the past.
And those [00:37:00] services are predicated on recommending energy conservation measures based on the data, taking the data, analyzing it to then make recommendations for how to do better. And so that was the core idea. It started with just base-building systems and ultimately provided a 30% cost share against total project costs, which is also very exciting because it's not a, it was not a performance-based incentive.
Like what you might've been able to do through con Edison or excuse me, other utilities. It was, Hey, if you worked with us to scope a project with an approved our 10 vendor, we will cut a check to that vendor to reduce the total project costs. And de-risks the investment. Make it easier for you to go further, do more.
That pro program was well received now. Subsidized R 10 installations and [00:38:00] services. And over a thousand buildings, it has impacted over 300 million square feet and pumped out over $75 million in incentives to those projects. But the biggest Testament to its success is now con Edison. Our local utility here is offering a similar program that offers a 70% cost share with a performance metric, but a 70% cost share for similar systems.
And that is always the best indication of my service success. When Conda is willing to take up, take it up and run with it. You know, they don't like running with a lot of. That's awesome.
[00:38:43] 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 [00:39:00] 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
And so how many of you said a thousand buildings? How many vendors are approved? Because I think a huge piece of this, right?
Is you looking at the marketplace and going, and I've done a lot of this for clients as well. Like there are so many people that say they do this from a technology standpoint. Um, you guys are basically saying like, we're going to validate each one of these one by one, and they're going to become, uh, you know, a certified our 10 vendor.
So how many, how many, or how many did you look at, I guess, and then how many, how many made it through the
[00:39:49] Ryan Baxter: funnel? Exactly. And so the original program received over 300 vendor applications. You can qualifications of which we [00:40:00] approved just over a hundred of which I think we still have projects from about 75, but that, that filtering is one of the fundamental value props, because if you're a real estate.
The company or management firm, you don't have time to validate a lot of these claims and what regularly gets glossed over even among the most effective vendors is, you know, in the best case scenario, they'll save you 30% on your energy bill, but that assumes that your building is about very well run.
And if you do happen to have a very well run off disability, the value proposition might be closer to five or 8% annual savings. And so having an entity that's able to validate these claims is very important for fostering more of these investments decisions. Yeah. And [00:41:00] it's that
[00:41:00] James Dice: list of a hundred published so that people in other markets could maybe start there as a place to
[00:41:06] Ryan Baxter: go look at.
So once upon a time, it was however, as my sorta enjoys doing, we have moved on to try and push the envelope further. The 1.0 program, as we used to refer to, it has been replaced by a new program called our 10 plus tenants. This is a similar premise where we're looking to foster more investments in qualified system and services, but it is a new higher bar because we realized from the first program, but the final frontier for optimizing buildings and getting after carbon emissions is by going deeper into the voting, not just focused on base-building systems and the backbone within owners control, but within tenant spaces integrating into the [00:42:00] equipment they have, because there are lots of horror stories.
Uh, tenant has a DX unit in a server room, but they failed to insulate the room effectively. And so it's on 24 7 trying to cool the entire floor, the room, and no one has any idea, but my third is now trying to solve this through the art templates tenants program, because we will provide a 33% cost share for projects that now go deeper.
Provide that tenant equipment integration provides some additional sub-metering provide power, quality meters, and really take a more holistic approach to optimizing buildings while facilitating the collaboration needed to reduce carbon emissions because in a typical New York city office, The tenants will be responsible for 50 or 60% of the energy consumption.
So [00:43:00] if you're only working with half the load, the upside is minimal. And so the new program has been around for about a year. Now we have approved 17 vendors is, is a higher bar because now in addition to everything from one point, oh, you have to have this tenant piece, you also have to have a machine learning or AI component to your service.
And so we don't expect to get up to a hundred. Again, we expect this to be a smaller program, but you know, a lot of folks are now realizing that this is a great thing to pursue because they can get system incentives from con Edison and then. Make ready costs or ongoing service costs. They can come to next Serta and we'll pick up that [00:44:00] backend and make it easier for them to go deeper in tenant spaces.
We're hopeful that we'll see some owners embrace automation and seek to control pendant equipment, or that makes sense, but it is very much top of mind for us to see landlords collaborating more proactively with their tenants on energy management. Got it. And so
[00:44:24] James Dice: what are the, some of the features that a R 10 vendor needs to have to sort of check that tenant box?
What does it need to be on?
[00:44:33] Ryan Baxter: Yeah. And so we need to be able to see at least 75% of the load of those building through the platform needs to be, it doesn't need to be able to control, but it has to integrate into the tenant space. The vendor has to advance a tenant engagement plan that lists out over a period of one to three years, how they will [00:45:00] deliver that same sort of energy conservation measure, recommendations to tenants and not just the base-building systems.
We, again, this is up to it's a bit more subjective because you have to convince Thomas EA that whatever your AI use cases qualifies, but we, we are seeking some components there. And, you know, hopefully we'll see a lot more folks go whole building because in a number of instances, we will see the landlord go very deep in the controls on their equipment, but not really touch their tenants.
It's historically been a black box what's going on in there. As long as they're getting their checks, they haven't cared, but we want to do away with that if only to facilitate collaboration, but at maximum, this is where we can get into more [00:46:00] interesting thing like local law, 97 fine avoidance, which is a big deal here because landlords are responsible for their tenants consumption as it relates to the fines that the city will one day.
And so we want to see much more collaboration and we want to see much more integration of equipment than we have the storage room. Got it. Got it.
[00:46:27] James Dice: Yeah. Um, I'd love to, maybe we'll have to follow up with Thomas on this, but I would love to see his qualification method around what meets the bar for ML AI and what doesn't, because that just, just from my perspective, if you look at, you said a hundred, you said 3,300 vendors have called themselves in our temp system.
At some point I would, I would venture to guess that at least maybe 299 of them say we do AI and ML. [00:47:00] Right. And it's probably very difficult to say, well, which, which of those claims are true and
[00:47:06] Ryan Baxter: which ones are not absolutely. And Thomas lives and breathes this stuff. I think a lot of it is meant to be subjective because we want to be able to
exactly. There's some wiggle room there, but if you can't convince Thomas can't get in. Uh, I love it. I love it.
[00:47:35] James Dice: Um, so talk to me about the future of the arts program. Cause you had our temp 1.0, now you have our 10 plus tenants and then now what's what's where is this headed?
[00:47:47] Ryan Baxter: Yeah. And so the story of our tents so far has been making it easier to manage your energy consumption, making it easier to bring everything into a single pane of glass.[00:48:00]
That's been helpful for a number of folks, but as we look to the future and start thinking more holistically about the future of office, we realized the need to advance to a single pane of truth. And by that, I mean, every IOT system you deploy might have its own dashboard. And while it might be enough to bring all of those dashboards together into one, if you don't also have competence that the devices are calibrated and producing the data, that's trustworthy.
It's not enough. That's why we're going to pennant space now, because we want to make sure that all of that equipment is brought together and brought together in a way that inspires confidence. But the owners and managers understand what's happening. As we, we start thinking more holistically about what happens in spaces.
We're now [00:49:00] working on. A new program that we're hoping to roll out later this year, it will be within our tem, but as a pilot initiative, focused on dedicated outdoor air system in particular advancing a new paradigm of floor by floor. De-carbonization how, how can we take advantage of tenant turnover to enable a more hardware driven control of the tenant experience?
We see this a lot already in new construction and in major repositionings where a building might see a nine figure retrofit budget, but when it comes to the vast majority of our buildings and the trigger point of tenant turnover, it never happens as far as we know. And so we're now trying to think through ways where [00:50:00] we can make.
More accessible for owners to gain access to the technical expertise. They need to begin scoping these types of upgrades but also we're trying to figure out how we can get into the implementation incentive as well. So that bit's a bit complicated. This semester never has enough money to do that.
And so how can we design a program that inspires people to think about? Upgrades at tenant turnover, more without having to pay them the total cost of those types of upgrades. Um, very specifically when we've looked at some of these retrofits price estimates, we've seen have been anywhere from 12 to over a hundred dollars a square foot. And you know, that's usually not very tenable for a real estate companies to just get. Yeah, but [00:51:00] that's why I started is important because if we can find a way to advance these types of upgrades with that in mind, then we'll all be better for it.
Yeah.
[00:51:10] James Dice: Let's go back to this. Did you call it singer single source of truth? Or what did you call it? Yeah. Single things,
[00:51:17] Ryan Baxter: pain, whatever, helping folks feel good about their data. Yeah, exactly.
[00:51:23] James Dice: And that's where, you know, you've listened to this show a lot before we talk about the value of the independent data layer.
Right. And so it feels like to me, you guys are shifting more towards, okay. you were incentivizing EMS applications, energy management information system applications. And when you described that, it sounded like you were more focused on, okay. How can we enable and incentivize this more data infrastructure layer?
Is that
[00:51:47] Ryan Baxter: right? Exactly right. Interesting. We want to make it easier for all of us to live in one place, but live in one place in actionable manner. And so if [00:52:00] we keep with the paradigm that only the leading owners are ever going to deal with this information themselves, we need to create systems within buildings that enable vendors for those owners to feel good about all of the inputs, because we don't want to end up in a scenario where a vendor comes along and says, oh, I need to deploy all these.
Duplicative devices because I don't trust any of your data, but if we can create new standards for the systems such that any vendor that walks into one of these buildings feel good that the inputs are trustworthy, then we can hopefully avoid unnecessary investment and increase the adoption of these types of solutions.
[00:52:49] James Dice: Got it. Got it. Makes perfect sense. I'm glad to hear
[00:52:52] Ryan Baxter: it. That's great.
[00:52:56] James Dice: Well, I'm obviously biased. Like I, I feel very strongly about the [00:53:00] need for that layer and the stack. So, uh, I think more people getting onboard for that and more incentives for it because the business case is really difficult. If you're not really enabling an outcome, you're enabling the infrastructure that could then enable an outcome.
Right? So it's, the incentives are needed in certain areas where the right thing to do, isn't necessarily the most obvious thing to do financially from a first
[00:53:24] Ryan Baxter: step standpoint.
[00:53:26] James Dice: Um, so you've talked about de-carbonization a little bit, I'd love to hear your, just maybe a, just a more general question around how does our team, which has traditionally been focused on.
Energy efficiency, like basically monitoring and building defined energy conservation measures. Right. How does that overlap with a building decarbonisation um, roadmap? Because what we talked about with the DOAs systems was to me, that's like a capital project that needs to happen. That's focused on getting to a different system type [00:54:00] or a different system, you know, fuel, right.
That's running the system, right. So that gets to more towards decarbonization, which is totally different, not totally different, but different than energy efficiency. Right. Different than monitoring. You have your capital upgrades, and then you have your ongoing monitoring piece. So how are you guys thinking about the decarbonization sort of road roadmap as a, as a program, or maybe that's a different program?
[00:54:24] Ryan Baxter: I don't know. It is a different program, but I do want to try and tackle this because this is an area that we are presently refining the messaging around. It's put simply our tenants, the enabling technology that will unlock tools like time of use carbon for your building. If you don't have an art 10 system in place, it's very hard for you to take a stance on the quality of your electrons at any given time, because not all electrons are [00:55:00] created equal.
And if you can take operational approaches that rely more heavily on times of day, that are less likely to trigger. Say fossil fuel fire peaker plants in con Edison's territory. That's a benefit to de-carbonization. And so creating the infrastructure, you need to understand your consumption granularly, that you can match it up with the generation that's feeding your grid at any given time, makes it easier to pursue.
De-carbonization makes it easier for you to get into things like offsets because you know, for better, for worse, it's still the wild west. Where, how do you really know if your offset is being used once and being retired? And it's only through [00:56:00] our 10 and similar. Installations on the generation side that you can begin matching up the electrons so that you can have confidence that this is actually decarbonisation, it's not just greenwashing and saying we're doing it, throwing money at the problem without actually having an impact.
Totally. Yeah, I agree.
[00:56:24] James Dice: That's why I put, I mean, that's, that's where there, those, the two are related. Right? So when I think about this, I think about like, what's the journey I have to go on to get from setting a target for carbon all the way to meeting that target and maintaining that performance over time.
So you have this, like, those of you that are on YouTube can see me, like in this linear fashion, you know, this linear step. It's not totally not linear, but I like to draw it linearly just to show it. But I like to put interval meter data analytics, like before the capital upgrade process. Right. So you have to know.
Number one, you start with utility bills, [00:57:00] that's a monthly data stream. Get more granular into interval. Data helps you see what your load profile is self to see how you're using energy. So I put that yeah. Upfront. And then once you do the capital project to upgrade things decarbonized, then you can use that same technology, our temp technology to then monitor a building to see, did it work?
Am I performing? Like I thought I would, that kind of thing. But I think the challenge is there are two separate things monitoring with technology and analyzing a building and doing a capital like huge infrastructure project to change out equipment, to get to where the building uses less carbon from an infrastructure standpoint to separate, uh, concepts.
And so I can see the challenge with within the set of advising both at the same
[00:57:46] Ryan Baxter: time, we're trying to hit that middle ground. The real time benchmarking enabled by art makes it easier to make the business case for the capitalist. Totally, [00:58:00] totally makes sense to me.
[00:58:01] James Dice: Um, okay. Let's talk about the hackathon so I know it's going on right now. So by the time this podcast comes out, you guys will, um, there'll be about a week or two away from the demo day. So can you just talk about, maybe start from the beginning? What are the goals of the hackathon?
[00:58:20] Ryan Baxter: Absolutely. And so it's very much what we were just talking about.
How can we relate our 10th decarbonization? And I sorta has been collecting interval data from all the projects that have received our concepts. And I started, it has created a repository, a data lake for all of that data. Yeah. Is now trying to think through use cases for the data that will accelerate de-carbonization of large buildings in New York, unlike a more traditional, nicer approach where they would just decide, Hey, here's the use case.
This time [00:59:00] we are actively soliciting ideas from the market through a hackathon we've created a API that provides participants with access to over 200 buildings, data. This is everything from the BAS connected devices, utility meters, equipment, sub-meters IOT devices, all normalized using project haystack and brick standards.
You can see it uniformally across all of the app, all of the assets, even with the different vendors, underlying each, all of it's been anonymized and through the hackathon participants gain access to the API and our challenge to create, or at least theorized a use case that again, connects the data to decarbonization.
We are [01:00:00] evaluating these submissions based on the write-ups based on their get hub documentation, but giving a big focus on what the use case is, how it helps the business case for decarbonisation, how it helps the business case for our 10 upgrades without incentives, as well as things like the ease of implementation and use of other data sources.
The goal, being that by the time this comes out, we will have received over a hundred really awesome mission that advanced these use cases for what are 10 data can mean for broader decarbonization. As you mentioned, we will be having our demo day. It's hosted by the building energy exchange. ASHRAE New York, as well as the [01:01:00] New York city mayor's office for climate and environmental justice.
It's on June 28th that afternoon. I highly recommend all of your audience sign up because we will be awarding $55,000 in cash prizes to our top three use cases. And we've gotten a lot of awesome, awesome registrants already, hopefully all submit off new cases, but just from a registration perspective, we have over 450 signups across 300 teams, including quite a few of your guests.
Folks like audit for an inbox, AI, Google prescriptive data, switch automation. We have an Enrail sign up as well as other teams from national labs like Berkeley and PNNL we have, uh, [01:02:00] over two dozen universities represented in the registration of bunches MEP firms. And so we're really hoping. Some very talented energy minded and data science minded individuals full identify the use case that makes our last conversation easier.
Demonstrate how art, some data directly support the. Love it love it. I
[01:02:27] James Dice: love to see that the labs competing against each other. It's like the battle of the buildings expert laboratories too. That's fun. I know that rivalry between unravel and LBNL and PNNL for front of me, right. Riflery is, is strong. So, uh, I'm sure there'll be looking to beat one another for sure.
And then you have the startups, all the startups competing against each other and the labs. That sounds, that sounds amazing. Um, what, when you say use case, what do you mean? What's an example of what a use case might look [01:03:00] like.
[01:03:01] Ryan Baxter: So that's an excellent question and we are very flexible here. It might be something as simple as a tool to evaluate the impact of the arts and projects based on the data so that we could, for example, comparing contrast across asset types, it's not apples to apples.
And so anything that could help with the comparison would be nice. I'm assuming we'll get a great deal, visual tools, things that just make it easier to interact with this data, because ultimately if you make art temp data more engaging, more interesting than it should support a wider variety of energy decisions.
Got it.
[01:03:46] James Dice: Okay. Yeah. So something to say, okay, we have all these buildings have like contributed all these, all the states. Uh, use cases. How do we use this data to advance decarbonization in New York [01:04:00] city? Essentially? No, thank you.
[01:04:02] Ryan Baxter: Thank you. You're so good at demystify.
Thanks.
[01:04:09] James Dice: Thanks. Uh, I just, I I'm, I'm rather slowed learning and so it's like, I have to repeat it to make sure I understand it. All right. And this has been super fun. Let's let's end with carve-outs. I'd love to hear what book, TV show or movie or et cetera, would you recommend the audience
[01:04:27] Ryan Baxter: checks out? Sure.
And so for anyone who was intrigued by my prop tech, Santa Claus, title, highly recommend prop tech 1 0 1 by Aaron blossom, Zach errands. It is a wonderful primary for all things. PropTech. We'll give you a bit of a historic perspective on how we came to even refer to it as prop tech, but really walks you through how real estate companies are thinking about it and how venture capitalists are [01:05:00] increasingly focused on serving those real estate companies.
Got it. Yeah, we'll put
[01:05:04] James Dice: that in the show notes. Okay. Mine is, uh, I want to own a share Farnam street. So Farnam street blog is something I've been reading, listening to the podcast for like a decade. Now, maybe more than that, I'm surprised that we've made this many, we've made it through this many episodes of that may talk to me about foreign street, but the concept of a mental model
[01:05:25] Ryan Baxter: is.
[01:05:27] James Dice: Something, I think everyone should check out and there's this three books behind me. I'm like pointing to these red books. Um, the, the three there's like three volumes of the great mental models. And so it sounds actually super boring, but it's, it's really interesting how simple concepts and simple frameworks really can be used to understand how the world works.
Um, and so I use a lot of frameworks and use a lot of mental models in the course, and I feel like it's our foundations course. And I feel like I owe a lot [01:06:00] to, um, Shane Parrish who started farm street. And, uh, I think everyone should check out and at least subscribe to his weekly
[01:06:07] Ryan Baxter: newsletter, brain food.
Are you, or
[01:06:11] James Dice: are you a
[01:06:11] Ryan Baxter: fan? You're not familiar. You should check it out. Exactly. It has
[01:06:17] James Dice: nothing to do with any, any smart buildings topic, but it's just general getting better at life topic.
Awesome. Well, thanks for coming on the show. It's great to meet you, Ryan. And we'll talk soon.
[01:06:32] Ryan Baxter: Thanks for having me looking forward to it.
[01:06:34] 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.
"Why would you get something that tracks consumption but doesn't include fault detection and diagnostics? Something that doesn't also include predictive analytics and performance optimization?"
—Ryan Baxter
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 104 is a conversation with Ryan J. S. Baxter, PropTech Advisor at 5, where he consults with the New York State Energy Research & Development Authority, AKA NYSERDA.
We talked about how New York City real estate is unique, the top 5 pitfalls for technology vendors trying to get a foothold there (and anywhere), the past, present, and future of NYSERDA’s Real Time Energy Management Program, AKA RTEM, and finally, the exciting Hackathon initiative the RTEM launched this year.
You can find Ryan on LinkedIn.
Enjoy!
Music credit: Dream Big by Audiobinger—licensed under an Attribution-NonCommercial-ShareAlike License.
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!
[00:00:03] 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.
[00:00:31] James Dice: This episode is a conversation with Ryan Baxter. Who's a PropTech adviser to the New York state energy research and development authority. AKA NYSERDA. We talked about how New York city real estate is unique. The top five pitfalls for technology vendors, trying to get a foothold there and anywhere I would add.
And then the past present and future of NYSERDA is realtime energy management program. AKA R. And finally the exciting hackathon initiative, the R 10. [00:01:00] Team launched earlier this year. So without further ado, please enjoy this episode of the nexus podcast with Ryan Baxter. Ryan, welcome to the show. Can you introduce yourself?
[00:01:11] Ryan Baxter: Absolutely excited to be here. I'm Brian Baxter. I wear a few hats, but most notably I am PropTech advisor to the New York state energy research and development facility of role. I like to refer to as prop tech center
[00:01:28] James Dice: and that costs, okay. You have to explain
[00:01:30] Ryan Baxter: that.
Why didn't you refer it to that chorus? And so my role at NYSERDA has largely focused over the last four years on designing and implementing the world's leading PropTech incentives. Um, Part of that entails hoping nicer to determine what's naughty. And what's nice as it's building up over the last few years, I've been able to parachute my [00:02:00] way in to over 300 building upgrade projects, impacting over 140 million square feet of office and multifamily in the five boroughs over a quarter of a billion dollars in total project costs against which I started has approved over 44 and a half million dollars in incentive PMs, 10 cent.
[00:02:26] James Dice: Uh, I love it. We're going to dig into NYSERDA a little bit and, and NYC a little bit. I'd love to hear the first, like before you got to this role, what's your, what's your background?
[00:02:38] Ryan Baxter: Sure. And so I had a non traditional routes, prop tech. It really started well. Uh, lobbyist for the real estate board of New York, a role I feel I was born for because I grew up in Midtown Manhattan on 57th street in a 50 story apartment [00:03:00] building.
And so, and so from the time I was a young child, I've had a deep resentment for buildings with fewer than three elevators. And so I became a lobbyist to spouts pro growth pro to Beltman advocacy because ultimately I would like to see New York city reach its potential so way more housing and ultimately become the greatest city in the world.
And so I spent, I guess it feels like a lifetime ago, but I spent six years as a lobbyist at REBNY there. I worked on everything from. Affordable housing incentives to sustainability, to technology initiatives. And I really got a sense for prop tech. When I was leading a campaign to enable Kogan in the city back before it was a bad word back before [00:04:00] we felt so strongly about onsite fossil fuel use.
But in the before times, there were a number of revenue members who were looking to improve their marketability and operations through Kogan inflation, but con Edison and other utilities had been the public service commission, which regulates all utilities. Now running codec plants is super hard and not only should kind of be the only.
Entity that runs them. But you know, if we were to allow everyone in anyone to run them all privately run, cogent plants might fail simultaneously, which is why they were able to convince the public service commission to allow the standby terrorists, how much you paid for standby power to exceed the cost of how much you would pay for power creating this meaningful [00:05:00] disincentive.
These installations, Hudson yards is cogent plants that really forced this to rev needs priority list. I was able to break a 10 year backlog within re taste proceedings to create regulatory release that benefited them and a number of other installations. Related to cogen plant has been profitable from day one of operations.
And that was when I had this Eureka moment, like, wait a minute. There's technology that makes real estate more viable, more attractive, more than it would be otherwise. And that started me down the path I've been on ever since.
[00:05:49] James Dice: And you go right back real quick to why coach ends at that word today. I just want
[00:05:53] Ryan Baxter: you to explain that to people.
Sure. And so we now have to focus not just on [00:06:00] efficiency, but de-carbonization and burning fossil fuels on site, even if you were doing so to create electricity and cheap more efficiently than you would otherwise be able to access those resources. It will not a great way to reach our climate goals. And so increasingly for the last I call it eight, 10 years in particular, there has been a movement away from onsite fossil fuel use and in particular coach and installations.
Got it. Got it.
[00:06:36] James Dice: Okay. So you, you were a lobbyist and then, and then
[00:06:38] Ryan Baxter: what, so going back a few years, I was reading the tea leaves and it seemed like it was about to be a very bad time to be a real estate law. If he like between a number of policy priorities and a growing sentiment towards a more democratic [00:07:00] approach to politics, I didn't want to be in the danger zone anymore.
I hung up my lobbying career after. You know, writing city and statewide law, helping bring about tens of billions of dollars in economic impact. But I wanted to find a way to maintain my relationship with a lot of these real estate companies. I wanted to find a way to pursue work that made me feel better inside.
And so on my way out the door, I was able to do some lobbying on my own behalf to convince NYSERDA that they should hire me as their real estate whisper. At the time they were struggling a little bit because they had just launched the clean energy fund, a brand new $5 billion initiatives, and in, so doing, they [00:08:00] had to terminate all of their existing programs.
You know, there are a lot of real estate companies who were. Unhappy with that choice. They believe it complicated. My cert is ability to drive adoption of its new incentive programs. And so I was able to convince them that with my assistance, we could resolve some of that market perception and meaningfully increase participation in new programs.
So I've been profit tech advisors since the end of 2018 prop tech
[00:08:36] James Dice: adviser, Santa Claus and real estate whisper
[00:08:40] Ryan Baxter: all in one
[00:08:44] James Dice: nice personal branding. I think they call that. That's great. Um, so I'd love to start this conversation off with just NYC as a whole. Can you talk about what makes, uh, NYC real estate, the real estate they're [00:09:00] unique in that marketplace
[00:09:01] Ryan Baxter: itself?
At its core New York city real estate is unique because of New York city history. New York city is arguably the most important city in the world because it has been first in so many regards, New York city invented American capitalism. It invented multiculturalism. As we know it, it was the prototype for industrial transition into a service economy.
And ultimately that has led to a lot of inflated egos, which is understandable. But within the real estate market, one of the most distinguishing elements is who owns what by that, I mean the largest owner of real estate in city of New York is the city of New York or municipal governments. And while that might not strike you as all of that odd consider.[00:10:00]
That the municipal governments, annual budgets here in New York city is in fact larger than the next 19 largest us city, government municipal bugs budgets, combined, combined. It's the massive player. And ultimately some of the most renowned real estate companies in the world, some of the largest in the world we own and manage a fraction of what the city of New York homes.
And so that dynamic is unique. Similarly, we have some strange elements to our market that kind of go against some of the fundamentals of real estate. As most of the world would know it. For example, we have basement windowless space in Midtown Manhattan, that leases for more per square. Then the [00:11:00] top of Willis tower in Chicago.
And you're like, how could that make sense? But it has a lot to do with the fact that our city limits haven't grown since the 19th century. And so we've always had very little land with which to develop and market, and that in turn has increased how much it costs to pursue real estate here. For example, you have talked a lot about the 3 3300 rule with a number of years guests, but wouldn't, you know, it, we have at least two office buildings today in Manhattan that are charging $300 a square foot in rent.
So the whole paradigm. Exactly. We do things a bit differently here, and it [00:12:00] has put New York city in a space where we are the exemplars of a number of things, including the disconnect between landlords and space users. COVID was a huge wake up call in that regard because there are presumably millions of New York.
Who feel their window ventilated apartments are somehow better ventilated in their office building. And it speaks to a lot of the complacency we have here. That's unique here because for decades and decades, you could get a 25 year lease signed pretty, not have to worry about your asset or what's going on in it at all.
Maybe you did a pneumatic control upgrade wasn't by the time that you're just sitting pretty on a beach somewhere, and now we're seeing a movement towards providing a space that is much [00:13:00] more supportive of users. One that's much more focused on occupier or space, user comfort, wellness, productivity. And I think that's where, you know, shout out to Ann Lapsley and the environs suite.
But that's where indoor environmental quality is really taking off. And again, where New York city is unique from just about anywhere else in the world. We're going to be at the forefront of all of those improvements. I love it. As
[00:13:34] James Dice: you're talking about that, we're hearing all this honking going on background too.
It's just, it puts it right into the perfect setting as you're explaining the city. And, uh, yeah, and I was there a couple of months ago and I just loved walking around thinking about all these changes happening in the midst of all these massive historical
[00:13:53] Ryan Baxter: landmarks. Really. Um,
[00:13:56] James Dice: you, you've sort of been this prop tech world and said, since you said you [00:14:00] sort of transitioned into this Santa Claus role, how about when, when that history intersects with technology and how technology sort of, um, available to help with this transition?
Right. What have you seen happen so far as these New York city landlords and building owners have started to implement technology? Has it gone? Well, it has it good. Not so well. What's been your assessment.
[00:14:29] Ryan Baxter: Yeah. And so I am a bit biased, I suppose, but it does strike me that when a technology becomes expected, New York city landlords are first to getting the best and brightest put into their buttons.
A wonderful example that folks regularly exclude from prop tech or elevators. We have some of the best elevators in the world. We would see landlords modernize their elevators [00:15:00] with great regularity without much hubbub or struggle. However, When it comes to less established companies, particularly prop tech startups, there are a number of pitfalls that I feel has created this perception that New York city, real estate hate prop tech hates technology dinosaurs.
That can't be bothered, but you know, a lot of it is just a fundamental misunderstanding of what's driving decision, making those statements. So the top five pitfalls I've seen in my prop tech experience, most startups are a list them, and then we can touch on each one quickly. Number one, this is something you've talked about a lot.
They don't know what problem they're solving. Number two, they don't know who to pitch their solution to. Number three, they don't know how to pitch their solution. Number [00:16:00] four. They don't know what to request from their pitch. Number five, they don't know how long it will take to drill into the issue on the, those quickly on not knowing what problems to solve.
I can't tell you how many awesome entrepreneurs I've seen decide. Hey, Microsoft Excel sucks. We need a purpose driven,
kudos having passion and wanting to do something. But if you are just doing something because you can, that's not a great way to market yourself in New York city real estate. And so the five business cases, the top five business cases I've seen, prop tech are unlocking new revenue, improving operational efficiency, improving customer satisfaction.[00:17:00]
Enabling process automation and improving data management. If your solution isn't doing one or more of those five, you probably aren't going to do well. Which leads into the next pitfall of not knowing who to pitch it to. A lot of folks are like, oh, I got to pitch the CEO. I got to take a top down piece.
We'd approach marketing my products and services. And that's understandable because it seems like a more straightforward approach. But if your product is to be used by chief engineers and you're pitching the CEO of a real estate company, you're going to create a lot of pension unnecessarily. And so knowing we include a pitch based on what your solution is and who benefits from it critical, but that's not enough because once you know who to pitch, you gotta know how to pitch.
And so being able to speak to the [00:18:00] specific priorities of the target you have in mind is key. A CEO might be more interested in improving the culture of their company than the cybersecurity which they put on the CIO CTO. The asset manager might be focused on NOI overall. The property management chair might own care about tenant experience.
Your chief engineer might only care about improving. Time efficiency of their work. And so being able to relate your solution to those priorities in multi-language that matters to the user super key. Yeah. We're real
[00:18:41] James Dice: quick. We call that in our, in our course, we teach similar mindset, right? And we call it the layers of value proposition.
So you might start with one stakeholder and what their key value proposition or their key driver would be. And then you have to look at all the different layers of the organization and dislike turns into [00:19:00] what some people called layer cake. But I don't, I don't really call it that, but yeah, the stacking, the layers on top of each
[00:19:06] Ryan Baxter: other, basically I liked that.
I liked that a lot. And then for the folks who are successful enough to have their cake, another huge pitfall is not knowing what to ask. You've gotten all of the yeses and support you feel you need, and, you know, The startups out there asked for the moon. They want to deploy across the entire portfolio.
They want an equity investment. They want someone to join their board. They want to be able to market everything as a case study of all the way. And you know, in individual instances, individual last can make sense, but there is not nearly enough time to prioritizing what's most important and you know, starting small and then scaling is always a better approach than asking for everything.
Because the last pitfall of not knowing how long this stuff takes, you get everything [00:20:00] right. You, you have a real value prop. You pitch the right people in the right way. You've asked for something that is more easily implemented than others. And so you. Audrey good to go. But then, you know, you follow up every week for eight months, not making any headway until you finally are of the mind that up, this was all a waste.
They lied to me. They're not worth my time. I'm gonna move on. But you know, if you had gone in with the knowledge that in New York city, real estate, especially in the energy management space, you're looking at a 12 to 24 month sales cycle longer. If any of your targets transition midstream, you, you would be better able to succeed because a big part of this, the reticence of real estate companies to believe that these solutions that are going to be around for a long time.
And if you can't [00:21:00] inspire confidence that you're going to be around in 5, 10, 15 years, then you're not going to do well. Being able to accommodate a 24 month sales cycle is a great way to differentiate yourself.
[00:21:17] James Dice: Fascinating. I feel like you just gave a masterclass in PropTech sales, but what I like to tell people is that even if you don't feel like you're a salesperson today, we're all, everyone in this, in this industry that listens to this podcast, we're all in sales, right?
We're, we're all trying to change the status quo in some way. And I love those pitfalls. Those are great. Those are great. Can you go back to number one around that? You mentioned data management. I just wanted to pick that up, but I think as an example, how do you make the financial case for better data management?
Like what's the ROI on that and
[00:21:56] Ryan Baxter: how does that calculate. Yeah. And so [00:22:00] this is an area that I think is evolving. It's particularly exciting because now we're seeing a movement towards ESG, unlike anything we've seen previously, where now, if you are unable to measure and monitor your consumption in a granular way, you can't possibly manage it and reduce your carbon emissions.
And so in this particular instance, we're seeing a movement to say, Hey, historically, we haven't cared about a number of these data streams, whatever. We don't need our BMS to talk to our tenant equipment because who cares what the tenant equipment's doing. We get paid just to say, w w we haven't needed.
Computerized maintenance software to talk to anything else, because as long as we are handling our hot and cold calls and making sure we're keeping [00:23:00] everything running tip top, what value is there in consolidating things. But increasingly we're seeing there's time and savings associated with having everything come together in a unified and actionable way.
You, you don't need as much folks focused on as many things. If you can have all the data streams, consolidated and interacting with one another in a more productive manner, that's also where we can start bleeding into the process. Automation value prop more easily because this. You can create a more enterprise 360 platform for every piece of data created through your operation.
Then the idea that you'll have to be as worried about your staff, transitioning and losing some of the operational brain trust that helps you meet your tenant expectations is lessons. [00:24:00] Now, if all of the data's in the right spot, you can begin thinking through the systems and processes that will reduce the need for, you know, the 70 year old chief engineer who shown up building a 4:00 AM every day, making sure everything's working, even though it may not be necessary, but nonetheless has that person has such a wealth of experience in dealing with issues that we are seeing more.
Investments more business decisions being driven by a desire to steal companies against those staff losses and transition. Got
[00:24:43] James Dice: it. Yeah, totally, totally agree. I see that. See that happening elsewhere in New York city though. I'm just curious.
How has are things like efficiency in time savings, like operational efficiency and time savings?
How to, how to landlords think about building [00:25:00] owners? Think about the actual ROI. Cause they're not going to fire that 70 year old guy that's managing their, they're not necessarily firing people when they're saving time, uh, through efficiency in operations. How has that ROI made then? when they, when they sort of go to justify that to
[00:25:22] Ryan Baxter: their bosses,
Leaders of the industry are increasingly using asset value to justify these improvements, because it's not just about what the simple payback is for improvement within the building. It's oh, can I now underwrite at a higher value to make the cost of capital cheaper or to make my asset more attractive to prospective institutional purchasers investors?
That piece I think is increasingly important [00:26:00] because we're seeing a broader industry-wide consolidation. The big folks are getting bigger and what's nice is whereas historically the more ROI driven approach would preclude some of these larger folks from caring about. 90 year old class C office with a average rent roll of 40 bucks a square foot.
Now they're seeing an arbitrage opportunity because if they can bring some of their procedural and process excellence from their class, a office buildings to this class C office. Now that class C office has much more upside and there's a larger potential for them to be able to appeal to ESG minded investors who, you know, want to be able to see very tangibly, how you are reducing the carbon footprint of your assets.
And that's not something that's easy in a superclass they office. Those are running really, really [00:27:00] well in a lot of instances. And so the value proposition to those ESG investors is lessons, but. There are only so many of them and the largest players are increasingly competing with one another to attract interest from those investors.
I am hopeful that we'll see a much more holistic approach to justifying some of these improvements, because if at the end of the day, you're saving more carbon than your competitor. You should outperform. Got it.
[00:27:31] James Dice: Got it. So it's like a direct link between, because we have these technologies installed this asset, it's going to be worth more.
[00:27:40] Ryan Baxter: Is that what you're saying? Yes, exactly. Right. And hopefully in the short term, you're seeing the actual rents increase, but particularly later this decade, I think we'll see, prior to those rents, increasing the assets themselves will be more sought after, by the folks [00:28:00] who have experience with de-carbonization.
[00:28:05] James Dice: Interesting. All right, let's jump in. And I started, can you talk about nice, sorta big picture wise? What, what is it?
[00:28:11] Ryan Baxter: Sure. And so the New York state energy research and development authority was created as a public entity in the 1970s to reduce New York state's carbon footprint and create jobs over the past few decades on everything and anything, energy related from helping with renewable energy, helping with renewable energy credits, every energy efficiency upgrades.
You can imagine it even gets super deep into obscure things like creating wood chips that has less pollutants for folks in upstate New York. We still use stoves and cabins and things, but all of that is to say it exists to [00:29:00] help energy consumers make more. Energy decisions and reduce their footprint. So that as a whole, the state can proceed is funded by rate payers, everyone who gets their electricity from a regulated utility pays a little packs.
We're not supposed to say that, but the system benefits charge funds. NYCERS programmatic interventions, as well as utility modernizing their grid infrastructure. Within next start as a whole, that has many different heads. I spend my time within the market development teams. Those teams collectively spend about $150 million a year to design and implement incentive programs meant.
Raise standards within the industry, get buildings to do things they might not otherwise do. And [00:30:00] typically in a pilot process, because the goal for all nice service programs is to prove the business case from a carbon reduction standpoint for an incentive so that utilities can subsequently scale the programs across their service territories and really maximize the potential savings and benefits within market developments.
We have recently been really focused on energy management technologies. We've been very focused on decarbonization strategies, and we are trying to find ways now to. Move beyond just select the patient because it's not enough to electrify your carbon emissions based static. And so now the name of the game is creating the [00:31:00] incentives to spur more investment in decarbonisation.
And we're seeing that in the form of technical assistance funding necessary to Love's technical assistance funding. If you want to pay an MEP firm to come tell you how to do things, to enable your carbon strategy, I started with love to buy down the cost that more people do it. It becomes more commonplace.
We see more manufacturers begin focusing on the New York market with their innovative products. You know, it's a lot of fun because one of the most. Glossed over aspects of next sort of the value prop is the standards and qualifications. They advanced in each individual program. And so one of the programs we'll dive into real time, energy management was super exciting to me because the team behind it looked at the state of the market and [00:32:00] said, Hey, this isn't good.
A lot of people are buying a bunch of nonsense and we should make it easier for folks to invest in these improvements, by creating a bar and challenging the market to pass our bar, to receive our AR 10 qualification so that the market can more easily differentiate from the many, many products and services.
Yeah, let's do jump
[00:32:26] James Dice: into the RSM program. So I started working with our team, the team when I was at Enrail and 20, 19, 20, 20 timeframe. And to my knowledge, there isn't any other program like. Throughout the world. Um, people might write into me and tell me I'm wrong after this, but I don't, I don't think there is some something that, um, like you said, qualifies and incentivizes, uh, energy management information systems, IE MIS, or analytics, some software, [00:33:00] sometimes people call it.
I haven't seen anything like it, but beyond maybe the, the combat program in Chicago, there's like a little bit of monitoring based commissioning incentives,
[00:33:10] Ryan Baxter: but
[00:33:11] James Dice: it's not the same scale at which you guys are doing it. It's not the same amount of money as how the same recurring revenue that you are, you guys provide in terms of incentives.
Um, so I guess my first question is, am I correct in that? Is there, is this unique, uh, in terms of, in New York and
[00:33:28] Ryan Baxter: not anywhere else? Absolutely. And so to your point, there are. Utility incentives that will touch on similar systems, but none that I'm aware of that we'll touch on as holistic a collection of solutions, our tendons, boats system, and services.
Got it.
[00:33:49] James Dice: Yeah. Let's start with the history of it. So maybe go back to the beginning. What was, what problem was this R 10 program trying to solve you? You kind of hinted at
[00:33:58] Ryan Baxter: it a little bit. [00:34:00] Sure. And so the history of the AR 10 program starts with another nicer to program, the remote energy management program, which I won't touch on too much because it did not do what nicer that I had hoped.
There was this whole idea that we should make it easier for this information be access your consumption data should be more accessible. If it's more accessible, it will be easier for you to use less energy and so on. And ultimately, ultimately that program. This is my 2 cents. My do not. And I started proper.
That program did not hit its metrics in a manner that inspired a continuation of it because a lot of folks would take the incentive, install the systems and the never use it. And so the core starting place for our tent was we need to ensure that the systems we subsidize are utilized and that's where our temp services [00:35:00] came in.
And so the amount on our 10 were eight years ago, I started reviewing the landscape with our 10 technical advisor shouts Thomas EA often guy he's been dealing with automated demand response since the eighties easily. One of the most knowledgeable people when it comes to this stuff in the entire world, he led an effort to review the status quo and came to the conclusion alongside NYSERDA.
Even for multinational BMS and control vendors, the folks most able to sell products into the large New York city buildings that are more clear standards for what customers should expect from these solutions. So you've talked about this, the law. Why would you get something to help you keep track of your consumption that didn't also include fault detection and [00:36:00] diagnostics? That didn't also include predictive analytics and performance optimization? Some of these obvious use cases for the data that's being centralized. And so I started to said, Hey, let's create a new standard through the AR 10 program that says you are only eligible for our incentives for this new descriptor.
If you have a cloud-based platform that can draw. Data in 15 minutes, intervals are better that can produce the observations needed to enable our temp services, which put simply the idea that even if the owner doesn't intend on using the system, necessarily if you are pursuing an art 10 project, there will be a vendor required to use the system for at least a year, so that we don't end up with orphan technology as we have in the past.
And those [00:37:00] services are predicated on recommending energy conservation measures based on the data, taking the data, analyzing it to then make recommendations for how to do better. And so that was the core idea. It started with just base-building systems and ultimately provided a 30% cost share against total project costs, which is also very exciting because it's not a, it was not a performance-based incentive.
Like what you might've been able to do through con Edison or excuse me, other utilities. It was, Hey, if you worked with us to scope a project with an approved our 10 vendor, we will cut a check to that vendor to reduce the total project costs. And de-risks the investment. Make it easier for you to go further, do more.
That pro program was well received now. Subsidized R 10 installations and [00:38:00] services. And over a thousand buildings, it has impacted over 300 million square feet and pumped out over $75 million in incentives to those projects. But the biggest Testament to its success is now con Edison. Our local utility here is offering a similar program that offers a 70% cost share with a performance metric, but a 70% cost share for similar systems.
And that is always the best indication of my service success. When Conda is willing to take up, take it up and run with it. You know, they don't like running with a lot of. That's awesome.
[00:38:43] 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 [00:39:00] 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
And so how many of you said a thousand buildings? How many vendors are approved? Because I think a huge piece of this, right?
Is you looking at the marketplace and going, and I've done a lot of this for clients as well. Like there are so many people that say they do this from a technology standpoint. Um, you guys are basically saying like, we're going to validate each one of these one by one, and they're going to become, uh, you know, a certified our 10 vendor.
So how many, how many, or how many did you look at, I guess, and then how many, how many made it through the
[00:39:49] Ryan Baxter: funnel? Exactly. And so the original program received over 300 vendor applications. You can qualifications of which we [00:40:00] approved just over a hundred of which I think we still have projects from about 75, but that, that filtering is one of the fundamental value props, because if you're a real estate.
The company or management firm, you don't have time to validate a lot of these claims and what regularly gets glossed over even among the most effective vendors is, you know, in the best case scenario, they'll save you 30% on your energy bill, but that assumes that your building is about very well run.
And if you do happen to have a very well run off disability, the value proposition might be closer to five or 8% annual savings. And so having an entity that's able to validate these claims is very important for fostering more of these investments decisions. Yeah. And [00:41:00] it's that
[00:41:00] James Dice: list of a hundred published so that people in other markets could maybe start there as a place to
[00:41:06] Ryan Baxter: go look at.
So once upon a time, it was however, as my sorta enjoys doing, we have moved on to try and push the envelope further. The 1.0 program, as we used to refer to, it has been replaced by a new program called our 10 plus tenants. This is a similar premise where we're looking to foster more investments in qualified system and services, but it is a new higher bar because we realized from the first program, but the final frontier for optimizing buildings and getting after carbon emissions is by going deeper into the voting, not just focused on base-building systems and the backbone within owners control, but within tenant spaces integrating into the [00:42:00] equipment they have, because there are lots of horror stories.
Uh, tenant has a DX unit in a server room, but they failed to insulate the room effectively. And so it's on 24 7 trying to cool the entire floor, the room, and no one has any idea, but my third is now trying to solve this through the art templates tenants program, because we will provide a 33% cost share for projects that now go deeper.
Provide that tenant equipment integration provides some additional sub-metering provide power, quality meters, and really take a more holistic approach to optimizing buildings while facilitating the collaboration needed to reduce carbon emissions because in a typical New York city office, The tenants will be responsible for 50 or 60% of the energy consumption.
So [00:43:00] if you're only working with half the load, the upside is minimal. And so the new program has been around for about a year. Now we have approved 17 vendors is, is a higher bar because now in addition to everything from one point, oh, you have to have this tenant piece, you also have to have a machine learning or AI component to your service.
And so we don't expect to get up to a hundred. Again, we expect this to be a smaller program, but you know, a lot of folks are now realizing that this is a great thing to pursue because they can get system incentives from con Edison and then. Make ready costs or ongoing service costs. They can come to next Serta and we'll pick up that [00:44:00] backend and make it easier for them to go deeper in tenant spaces.
We're hopeful that we'll see some owners embrace automation and seek to control pendant equipment, or that makes sense, but it is very much top of mind for us to see landlords collaborating more proactively with their tenants on energy management. Got it. And so
[00:44:24] James Dice: what are the, some of the features that a R 10 vendor needs to have to sort of check that tenant box?
What does it need to be on?
[00:44:33] Ryan Baxter: Yeah. And so we need to be able to see at least 75% of the load of those building through the platform needs to be, it doesn't need to be able to control, but it has to integrate into the tenant space. The vendor has to advance a tenant engagement plan that lists out over a period of one to three years, how they will [00:45:00] deliver that same sort of energy conservation measure, recommendations to tenants and not just the base-building systems.
We, again, this is up to it's a bit more subjective because you have to convince Thomas EA that whatever your AI use cases qualifies, but we, we are seeking some components there. And, you know, hopefully we'll see a lot more folks go whole building because in a number of instances, we will see the landlord go very deep in the controls on their equipment, but not really touch their tenants.
It's historically been a black box what's going on in there. As long as they're getting their checks, they haven't cared, but we want to do away with that if only to facilitate collaboration, but at maximum, this is where we can get into more [00:46:00] interesting thing like local law, 97 fine avoidance, which is a big deal here because landlords are responsible for their tenants consumption as it relates to the fines that the city will one day.
And so we want to see much more collaboration and we want to see much more integration of equipment than we have the storage room. Got it. Got it.
[00:46:27] James Dice: Yeah. Um, I'd love to, maybe we'll have to follow up with Thomas on this, but I would love to see his qualification method around what meets the bar for ML AI and what doesn't, because that just, just from my perspective, if you look at, you said a hundred, you said 3,300 vendors have called themselves in our temp system.
At some point I would, I would venture to guess that at least maybe 299 of them say we do AI and ML. [00:47:00] Right. And it's probably very difficult to say, well, which, which of those claims are true and
[00:47:06] Ryan Baxter: which ones are not absolutely. And Thomas lives and breathes this stuff. I think a lot of it is meant to be subjective because we want to be able to
exactly. There's some wiggle room there, but if you can't convince Thomas can't get in. Uh, I love it. I love it.
[00:47:35] James Dice: Um, so talk to me about the future of the arts program. Cause you had our temp 1.0, now you have our 10 plus tenants and then now what's what's where is this headed?
[00:47:47] Ryan Baxter: Yeah. And so the story of our tents so far has been making it easier to manage your energy consumption, making it easier to bring everything into a single pane of glass.[00:48:00]
That's been helpful for a number of folks, but as we look to the future and start thinking more holistically about the future of office, we realized the need to advance to a single pane of truth. And by that, I mean, every IOT system you deploy might have its own dashboard. And while it might be enough to bring all of those dashboards together into one, if you don't also have competence that the devices are calibrated and producing the data, that's trustworthy.
It's not enough. That's why we're going to pennant space now, because we want to make sure that all of that equipment is brought together and brought together in a way that inspires confidence. But the owners and managers understand what's happening. As we, we start thinking more holistically about what happens in spaces.
We're now [00:49:00] working on. A new program that we're hoping to roll out later this year, it will be within our tem, but as a pilot initiative, focused on dedicated outdoor air system in particular advancing a new paradigm of floor by floor. De-carbonization how, how can we take advantage of tenant turnover to enable a more hardware driven control of the tenant experience?
We see this a lot already in new construction and in major repositionings where a building might see a nine figure retrofit budget, but when it comes to the vast majority of our buildings and the trigger point of tenant turnover, it never happens as far as we know. And so we're now trying to think through ways where [00:50:00] we can make.
More accessible for owners to gain access to the technical expertise. They need to begin scoping these types of upgrades but also we're trying to figure out how we can get into the implementation incentive as well. So that bit's a bit complicated. This semester never has enough money to do that.
And so how can we design a program that inspires people to think about? Upgrades at tenant turnover, more without having to pay them the total cost of those types of upgrades. Um, very specifically when we've looked at some of these retrofits price estimates, we've seen have been anywhere from 12 to over a hundred dollars a square foot. And you know, that's usually not very tenable for a real estate companies to just get. Yeah, but [00:51:00] that's why I started is important because if we can find a way to advance these types of upgrades with that in mind, then we'll all be better for it.
Yeah.
[00:51:10] James Dice: Let's go back to this. Did you call it singer single source of truth? Or what did you call it? Yeah. Single things,
[00:51:17] Ryan Baxter: pain, whatever, helping folks feel good about their data. Yeah, exactly.
[00:51:23] James Dice: And that's where, you know, you've listened to this show a lot before we talk about the value of the independent data layer.
Right. And so it feels like to me, you guys are shifting more towards, okay. you were incentivizing EMS applications, energy management information system applications. And when you described that, it sounded like you were more focused on, okay. How can we enable and incentivize this more data infrastructure layer?
Is that
[00:51:47] Ryan Baxter: right? Exactly right. Interesting. We want to make it easier for all of us to live in one place, but live in one place in actionable manner. And so if [00:52:00] we keep with the paradigm that only the leading owners are ever going to deal with this information themselves, we need to create systems within buildings that enable vendors for those owners to feel good about all of the inputs, because we don't want to end up in a scenario where a vendor comes along and says, oh, I need to deploy all these.
Duplicative devices because I don't trust any of your data, but if we can create new standards for the systems such that any vendor that walks into one of these buildings feel good that the inputs are trustworthy, then we can hopefully avoid unnecessary investment and increase the adoption of these types of solutions.
[00:52:49] James Dice: Got it. Got it. Makes perfect sense. I'm glad to hear
[00:52:52] Ryan Baxter: it. That's great.
[00:52:56] James Dice: Well, I'm obviously biased. Like I, I feel very strongly about the [00:53:00] need for that layer and the stack. So, uh, I think more people getting onboard for that and more incentives for it because the business case is really difficult. If you're not really enabling an outcome, you're enabling the infrastructure that could then enable an outcome.
Right? So it's, the incentives are needed in certain areas where the right thing to do, isn't necessarily the most obvious thing to do financially from a first
[00:53:24] Ryan Baxter: step standpoint.
[00:53:26] James Dice: Um, so you've talked about de-carbonization a little bit, I'd love to hear your, just maybe a, just a more general question around how does our team, which has traditionally been focused on.
Energy efficiency, like basically monitoring and building defined energy conservation measures. Right. How does that overlap with a building decarbonisation um, roadmap? Because what we talked about with the DOAs systems was to me, that's like a capital project that needs to happen. That's focused on getting to a different system type [00:54:00] or a different system, you know, fuel, right.
That's running the system, right. So that gets to more towards decarbonization, which is totally different, not totally different, but different than energy efficiency. Right. Different than monitoring. You have your capital upgrades, and then you have your ongoing monitoring piece. So how are you guys thinking about the decarbonization sort of road roadmap as a, as a program, or maybe that's a different program?
[00:54:24] Ryan Baxter: I don't know. It is a different program, but I do want to try and tackle this because this is an area that we are presently refining the messaging around. It's put simply our tenants, the enabling technology that will unlock tools like time of use carbon for your building. If you don't have an art 10 system in place, it's very hard for you to take a stance on the quality of your electrons at any given time, because not all electrons are [00:55:00] created equal.
And if you can take operational approaches that rely more heavily on times of day, that are less likely to trigger. Say fossil fuel fire peaker plants in con Edison's territory. That's a benefit to de-carbonization. And so creating the infrastructure, you need to understand your consumption granularly, that you can match it up with the generation that's feeding your grid at any given time, makes it easier to pursue.
De-carbonization makes it easier for you to get into things like offsets because you know, for better, for worse, it's still the wild west. Where, how do you really know if your offset is being used once and being retired? And it's only through [00:56:00] our 10 and similar. Installations on the generation side that you can begin matching up the electrons so that you can have confidence that this is actually decarbonisation, it's not just greenwashing and saying we're doing it, throwing money at the problem without actually having an impact.
Totally. Yeah, I agree.
[00:56:24] James Dice: That's why I put, I mean, that's, that's where there, those, the two are related. Right? So when I think about this, I think about like, what's the journey I have to go on to get from setting a target for carbon all the way to meeting that target and maintaining that performance over time.
So you have this, like, those of you that are on YouTube can see me, like in this linear fashion, you know, this linear step. It's not totally not linear, but I like to draw it linearly just to show it. But I like to put interval meter data analytics, like before the capital upgrade process. Right. So you have to know.
Number one, you start with utility bills, [00:57:00] that's a monthly data stream. Get more granular into interval. Data helps you see what your load profile is self to see how you're using energy. So I put that yeah. Upfront. And then once you do the capital project to upgrade things decarbonized, then you can use that same technology, our temp technology to then monitor a building to see, did it work?
Am I performing? Like I thought I would, that kind of thing. But I think the challenge is there are two separate things monitoring with technology and analyzing a building and doing a capital like huge infrastructure project to change out equipment, to get to where the building uses less carbon from an infrastructure standpoint to separate, uh, concepts.
And so I can see the challenge with within the set of advising both at the same
[00:57:46] Ryan Baxter: time, we're trying to hit that middle ground. The real time benchmarking enabled by art makes it easier to make the business case for the capitalist. Totally, [00:58:00] totally makes sense to me.
[00:58:01] James Dice: Um, okay. Let's talk about the hackathon so I know it's going on right now. So by the time this podcast comes out, you guys will, um, there'll be about a week or two away from the demo day. So can you just talk about, maybe start from the beginning? What are the goals of the hackathon?
[00:58:20] Ryan Baxter: Absolutely. And so it's very much what we were just talking about.
How can we relate our 10th decarbonization? And I sorta has been collecting interval data from all the projects that have received our concepts. And I started, it has created a repository, a data lake for all of that data. Yeah. Is now trying to think through use cases for the data that will accelerate de-carbonization of large buildings in New York, unlike a more traditional, nicer approach where they would just decide, Hey, here's the use case.
This time [00:59:00] we are actively soliciting ideas from the market through a hackathon we've created a API that provides participants with access to over 200 buildings, data. This is everything from the BAS connected devices, utility meters, equipment, sub-meters IOT devices, all normalized using project haystack and brick standards.
You can see it uniformally across all of the app, all of the assets, even with the different vendors, underlying each, all of it's been anonymized and through the hackathon participants gain access to the API and our challenge to create, or at least theorized a use case that again, connects the data to decarbonization.
We are [01:00:00] evaluating these submissions based on the write-ups based on their get hub documentation, but giving a big focus on what the use case is, how it helps the business case for decarbonisation, how it helps the business case for our 10 upgrades without incentives, as well as things like the ease of implementation and use of other data sources.
The goal, being that by the time this comes out, we will have received over a hundred really awesome mission that advanced these use cases for what are 10 data can mean for broader decarbonization. As you mentioned, we will be having our demo day. It's hosted by the building energy exchange. ASHRAE New York, as well as the [01:01:00] New York city mayor's office for climate and environmental justice.
It's on June 28th that afternoon. I highly recommend all of your audience sign up because we will be awarding $55,000 in cash prizes to our top three use cases. And we've gotten a lot of awesome, awesome registrants already, hopefully all submit off new cases, but just from a registration perspective, we have over 450 signups across 300 teams, including quite a few of your guests.
Folks like audit for an inbox, AI, Google prescriptive data, switch automation. We have an Enrail sign up as well as other teams from national labs like Berkeley and PNNL we have, uh, [01:02:00] over two dozen universities represented in the registration of bunches MEP firms. And so we're really hoping. Some very talented energy minded and data science minded individuals full identify the use case that makes our last conversation easier.
Demonstrate how art, some data directly support the. Love it love it. I
[01:02:27] James Dice: love to see that the labs competing against each other. It's like the battle of the buildings expert laboratories too. That's fun. I know that rivalry between unravel and LBNL and PNNL for front of me, right. Riflery is, is strong. So, uh, I'm sure there'll be looking to beat one another for sure.
And then you have the startups, all the startups competing against each other and the labs. That sounds, that sounds amazing. Um, what, when you say use case, what do you mean? What's an example of what a use case might look [01:03:00] like.
[01:03:01] Ryan Baxter: So that's an excellent question and we are very flexible here. It might be something as simple as a tool to evaluate the impact of the arts and projects based on the data so that we could, for example, comparing contrast across asset types, it's not apples to apples.
And so anything that could help with the comparison would be nice. I'm assuming we'll get a great deal, visual tools, things that just make it easier to interact with this data, because ultimately if you make art temp data more engaging, more interesting than it should support a wider variety of energy decisions.
Got it.
[01:03:46] James Dice: Okay. Yeah. So something to say, okay, we have all these buildings have like contributed all these, all the states. Uh, use cases. How do we use this data to advance decarbonization in New York [01:04:00] city? Essentially? No, thank you.
[01:04:02] Ryan Baxter: Thank you. You're so good at demystify.
Thanks.
[01:04:09] James Dice: Thanks. Uh, I just, I I'm, I'm rather slowed learning and so it's like, I have to repeat it to make sure I understand it. All right. And this has been super fun. Let's let's end with carve-outs. I'd love to hear what book, TV show or movie or et cetera, would you recommend the audience
[01:04:27] Ryan Baxter: checks out? Sure.
And so for anyone who was intrigued by my prop tech, Santa Claus, title, highly recommend prop tech 1 0 1 by Aaron blossom, Zach errands. It is a wonderful primary for all things. PropTech. We'll give you a bit of a historic perspective on how we came to even refer to it as prop tech, but really walks you through how real estate companies are thinking about it and how venture capitalists are [01:05:00] increasingly focused on serving those real estate companies.
Got it. Yeah, we'll put
[01:05:04] James Dice: that in the show notes. Okay. Mine is, uh, I want to own a share Farnam street. So Farnam street blog is something I've been reading, listening to the podcast for like a decade. Now, maybe more than that, I'm surprised that we've made this many, we've made it through this many episodes of that may talk to me about foreign street, but the concept of a mental model
[01:05:25] Ryan Baxter: is.
[01:05:27] James Dice: Something, I think everyone should check out and there's this three books behind me. I'm like pointing to these red books. Um, the, the three there's like three volumes of the great mental models. And so it sounds actually super boring, but it's, it's really interesting how simple concepts and simple frameworks really can be used to understand how the world works.
Um, and so I use a lot of frameworks and use a lot of mental models in the course, and I feel like it's our foundations course. And I feel like I owe a lot [01:06:00] to, um, Shane Parrish who started farm street. And, uh, I think everyone should check out and at least subscribe to his weekly
[01:06:07] Ryan Baxter: newsletter, brain food.
Are you, or
[01:06:11] James Dice: are you a
[01:06:11] Ryan Baxter: fan? You're not familiar. You should check it out. Exactly. It has
[01:06:17] James Dice: nothing to do with any, any smart buildings topic, but it's just general getting better at life topic.
Awesome. Well, thanks for coming on the show. It's great to meet you, Ryan. And we'll talk soon.
[01:06:32] Ryan Baxter: Thanks for having me looking forward to it.
[01:06:34] 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.
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