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āBuildings are not bondsā¦ The key difference that I think a huge amount of the real estate industry does not appreciate is that a building is a product that people have to use. So it is a fixed income asset, but it is also a product that people need to be in, you know, for you to make money as an owner. And that is really, really evident right now.ā
āAaron Lapsley
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Episode 42 is a conversation with Aaron Lapsley, Founder of System2 Consulting.
We talked about Aaronās awesome resume in smart buildings, and I picked his brain on what heās learned from his years at Cushman & Wakefield, Switch Automation, and more.
Then we took a bit of a deep dive into smart building strategy, and Aaron gave me a buzzword- and hype-free update on what's going on in the world of IAQ and RESET in the COVID era.
You can find Aaron Lapsley on LinkedIn.
Enjoy!
Music credit: Dream Big by Audiobingerālicensed 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!
James Dice: [00:00:03] 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.
This episode of the podcast is brought to you by nexus pro nexus pro is an annual or monthly subscription where members get exclusive writing podcasts and invites to members only zoom gatherings. You can find info on how to join and support the Without further ado, please enjoy this episode, the nexus podcast.
Episode 42 is a conversation with Aaron Lapsley. founder of system two consulting. We talked about Erin's awesome resume and smart buildings. And I picked his brain on what he's learned from his years at Cushman Wakefield, switch automation, and more, then we took a bit of a deep dive into smart building strategy.
And Aaron gave me a buzzword and hype free update on what's going on in the world of IQ and reset in the COVID era. Without further ado, please enjoy nexus podcast, episode 42. Hey, Aaron, welcome to the nexus podcast. Can you introduce yourself for us?
Aaron Lapsley: [00:01:24] Yeah, sure. Thanks James. Happy to be here. Uh, my name is Erin Lapsley. I'm an engineer management consultant and general technologists, in real estate. And,
James Dice: [00:01:35] uh, I remember like when I first started the podcast, I talked to Deb Noller and he was, uh, Friend of both of ours, she told me to have you on.
And it took me almost a year to actually have you here. So that's great. Uh, can you kind of give us a background on your career and I want to dig into a lot of different areas of your career, but I think there are very few that have the sort of pedigree you have in our industry. So maybe take us through like a resume of all the cool stuff you've done.
Aaron Lapsley: [00:02:03] Sure. Yeah. I'll try and keep it brief. Um, yeah, and yeah, you know, had a huge impact on my career and the time I spent with, uh, with switch automation and even and I thought, you know, a lot of folks like that that has really made a big impact on me. Yeah. so I, I do appreciate her. So I have this strange sort of breadth of experience in, in real estate services.
I I've always worked around buildings or energy. So I started my career, um, a mechanical engineering student, uh, university of Oklahoma. I started out in the energy industry, upstream oil and gas. And so I worked for a year, uh, worked for a girl that company, worked, uh, some in the field. Uh, with a friend of mine, his family company, putting together surface equipment, uh, learning mostly.
and then I did the first year of a master's degree in petroleum engineering that I decided I didn't want to work in the oil and gas industry anymore. It was a rough time for the oil business in the, in the mid two thousands. So I, and my girlfriend at the time now my wife had moved up to New York. I wanted a big change of pace.
And so I moved up to New York without a job, and I wanted to get into, Engineering consulting and HVAC engineering, which I save that story for another day over a beer. But I did over a period of time. Short period of time to get into that industry. and had a very successful career with Lopez associates in New York.
So I designed HVAC in a lot of analysis. I got, uh, lead accredited before I got my professional engineering license in which was early days for lead. It was lead 2.1, I believe is what we took the test on. I actually had to pull my credential out the other day. It was remembering back. Um, and so, we were kind of starting the early stages of the like sustainable design studio and we're doing a lot of kind of project work to energy modeling, retrofits and upgrades, you know, constant work like that going on in New York.
And it got me very interested in the energy side of buildings. Um, and, Starting to tie those two things together. I ended up going to do an MBA. I went to Harvard business school was very fortunate to get in there. And that's just a, you know, an absurdly transformational experience that you don't get very often.
Um, and really, really accelerated my career. I ended up doing kind of a lot of people go into management consulting after an MBA. And if It's a two year continuation of business school. So I worked for Deloitte consulting for another year and a half or so.
And about half the time I worked in corporate real estate. Do they have a good corporate real estate practice? Now I got more exposure to the technology side. I should also say that. What got me into building tech in general is at HBS. We did a field study where you can substitute a project for a class, and it was with McKinstry up in Seattle that the design build operate, maintain contracts are really neat.
Fantastic company. And they had purchased the, uh, some of the engineering energy software assets from icon. And we're looking to explore what to do to build a business around active energy management. And there's a lot of companies that do that kind of work now, but it was early days in 2010 and we helped them with a strategy on that.
And it really got me thinking about that time about why we weren't doing centralized operations for real estate for so then just fast forwarding quickly ended up going to a boutique consultants, doing smart building programs, integrating BMX data, setting up centralized operation centers. Um, ended up going and working for switch automation was the first U S employees.
They came over from Sydney and LTE headquarters in San Francisco and, you know, had an amazing time their startup experience, you know, help them with product, help them build the services team. It's not flourishing and doing amazing things. Um, and then, I ended up going over to work for Darryl Smith, who had just brought in Cushman Wakefield is, is that them provider at Google after that.
Um, and that was kind of, another really amazing experience, on building technology. So did a variety of things, ran energy management, uh, ran a building technology program. We ultimately had this experience to be able to go in and do that at a corporate level for Cushman. which I'm sure we'll, we'll talk about more.
James Dice: [00:06:25] Absolutely. Ā mutual friend, Dennis Krieger who introduced us, uh, that, uh, you guys are big fans of each other, which is, which is fun. So shout out to Dennis for making this conversation happen. Uh, can you tell us about system two? So you left Cushman, recently and started your own thing system too.
So tell us, tell us what's up with that.
Aaron Lapsley: [00:06:46] Sure. Yeah. Um, start assisting to consulting, um, as a vehicle to do that engineering consulting work actually a number of years ago, and then hadn't done very much with it. really got it fired up in earnest, in November. After leaving, Cushman and, you know, look, I just saw a major opportunity to, to move into providing services directly to clients.
Um, and so starting to pursue that now, as a firm, you know, consulting and engineering firms, specializing in technology for the built environment, building systems, you know, working with designers, developers, owners, operators, so real estate, to improve. Building occupant experience, health and safety and, and, building performance, using data.
Digital solutions, focusing on technology strategy and programs through implementation and program deployment. And then also related engineering services, things like applying OT and IOT solutions, upgrades doing building technology assessments, and then, you know, related to high-performance buildings, doing HVAC optimization and retrofits upgrades.
and I think there's just, I I've seen from clients, I've talked to them about it a number of times, because there's a beneficial strategy, for me to be able to provide services that are into heads, because a lot of times there's not a very particularly well-managed handoff between those phases of the life cycle of a, you know, a building technology program.
So, As you kind of pointed out, I've got a bit of a strangely broad background that enables me to go from strategy through to sort of building level engineering. But you know, I'm starting to already see success in applying that model. Yeah, the
James Dice: [00:08:25] handoffs in our industry are, and that's one of the things I teach in the course.
It's like, there's so many different places for, for the handoffs to go wrong. That's definitely one of them. Yeah. Strategy too. I mean all the way to design, to operations. Exactly. cool. That's such an amazing background. Uh, so let's talk about, um, I mean, I'm excited to all the things we could potentially unpack here at the.
Question that I normally ask guests is why is technology in buildings so far behind say the technology in our pockets? And I want to add a second piece of that for you, which is your, your LinkedIn headline, which is. Maybe you can just share what your, your LinkedIn headline is as part of your, your
Aaron Lapsley: [00:09:09] answer.
I change it all the time. So I don't know which one you're referring. I try to keep it fresh. just as a rule, but I mean, I, think the most recent one, maybe the provocative one that you're referencing was challenging theory to be better. And then I I've got this hashtag I use the buildings are not bonds.
Yeah. Yeah. So the challenging CRE to be better part, I think is. It may be controversial to some people, but if people in our neck of the woods certainly understand that that's something that needs to be dyed. Buildings are not bonds. Is it really came from Really my time in real estate in general, but it's been particularly in the last like eight years or so from 2013 on, I really worked in the operational side of real estate.
So not so much, I had done lots of design and construction side stuff, but really the kind of operating building, how do we get data out of them? What do we do with it? How do we change operating processes? And. You know, in operating building margins are, are thin, a building is X fixed income assets. It is finance, or expected to perform in a way that is a fixed income asset, like a box, meaning there's a maximum that you're going to get out of a building on rent in any given year.
And there's a lot of downsides and not a huge amount of upside, but it's fairly predictable income. You know, stable, overcoming the, obviously disrupted right now in the office and retail sectors, but in general, these assets perform with a somewhat of a risk return profile of a, fixed income asset versus like an equity, but buildings are not bomb.
And oftentimes they are treated like bonds. They're securitized like bonds from a finance perspective. The key difference that I think a huge amount of the real estate industry does not appreciate is that a building is a product that people have to use. Yeah. So it is a, it is a fixed income asset, but it is a product that people need to be in and, you know, for you to make money as an owner.
And that is really, really evident right now. Um, every office tenant right now is reducing its portfolio or planning to, I mean, make no mistake about it. They're all reducing in some capacity. Very few are going up versus what their previous trajectory may have been. Even the big tech companies.
Right. Um, as people move towards hybrid. So Scott got, you know, we've been talking for awhile about dispersion in house, you know, commercial real estate, third largest asset class in the world is going to have this massive value transferred to residential real estate, which we've already seen in prices. I just experienced that.
Buying a house myself, and I think that's real now. I think maybe he's overplaying it a little bit. There will still be the need for, for assets, but the transition. You know, James, like for me, it shouldn't be just about like readjusting valuation of buildings and people taking a haircut on their bond.
It's about making the product something that people want to use. And there's a lot of things that we can unpack about that high level. I was using that hashtag before COVID because it's just a real problem. Like too many people that have way too much power. In real estate, have no idea what goes on in the actual buildings or how they work or what they do for the people that go.
James Dice: [00:12:27] Absolutely. So what are the, some of the ways that you would then educate them on that?
Aaron Lapsley: [00:12:33] Well, I mean, it's kind of starting to happen, you know, tenant experience as become or workplace experience for, corporate real estate groups. Is It's not a, an old concept, but it's not quite new either. And it's developed quite a bit, particularly in the last few years.
So, I mean, I think it's kind of starting to happen in some sense where I see a big lack of understanding though, around things that aren't just highlights like bullet points on a marketing sheet for a building, you know, like, does it have a gin? Does it have a cafe? Does it have an outdoor terrace?
That stuff is great and important part of an experience. There are other things that matter about how buildings were two things on the cost side that I know you and I have worked on for. You know, at least in my case, like a larger chunk of my career than maybe even I should have like very specific topics, topics around energy maintenance and, you know, sort of building optimization that stuff matters because of particularly because of the ESG investing on the CRE side, you know what I mean?
Like it's being pushed to the fork, but there's a lot of things about building operations. Just about what the, how it works to people don't think about necessarily at the forefront. No. How people get in and out of the building. So access control or management processes. Like if you look at the data that people like top Moto or lease manners, these companies that do this type of like worker's survey for the office sector, It's stuff that makes people lives easier.
That is always at the top of those surveys. And there's usually that gaps too. Um, so it's, you know, yeah. They they're happy to have an outdoor terrace too. but like I see a lot of 40 or $50 million lobby projects and office buildings where it's like, okay, but if you're not putting in like a modern mobile badging seamless to access control system, like yeah.
You're not really doing what you, you need, you know, to really improve the experience
James Dice: [00:14:26] you described. That piece is like, don't waste my time. Like, I have a very efficient life that I've designed inside my home. And when I go to the office, like, the building shouldn't waste my time. Right. And, that's how I've always phrased it as like, it there's so much friction in an average building, from this point to that point, to this point, you know?
So
Aaron Lapsley: [00:14:45] yeah. Can we touch on your question about why technology is behind them? Yeah. So that was
James Dice: [00:14:50] like, buildings are not bonds. That's one reason. W What's your broader answer? Yeah.
Aaron Lapsley: [00:14:54] Well, I, I was thinking about this, you know, because I, I knew you would ask that question and I've done a lot with like, sort of corporate technology in general.
Um, particularly I think back to what I was doing with Deloitte and some of what we were doing with technology programs when I was at Cushman. When you're working for a corporate real estate client in general, even when you're working in the workplace side, you end up talking about the rest of their tech infrastructure in some way, shape or form.
And it gives me this perspective that I'm not sure that like us having an iPhone in our pocket is a fair comparison for buildings. I think that the question of whether or not like. technology is behind any buildings is like relative to what? And if you view it relative to the average enterprise technology stack, even for a company, you know who I won't name, but ought to be expected to be held to a higher standard, it can be very unsophisticated.
No, that's not to say that buildings aren't behind in some cyber security is an area where I think a lot of buildings are definitely behind, but that's because in a way, buildings were one of the first things that actually had connected systems to the internet. So I've said this before, like the concept of IOT.
buildings had essentially what we call IOT like 30 years ago. Yeah. I mean, and it's become more common to have it connected for remote monitoring by your BAS vendor and energy management company or for your building engineers to look it up at home. That's relative becoming more common. More new, but there were networks systems of connected devices in buildings before.
Just about everything other than say manufacturing and industrial. Yeah. So like building in a way, adopted technology early. And then now it's hard to upgrade. It's expensive to upgrade. Over time. And that's the same with most big companies. You know, one of the issues is that big is hard to maintain when you're big, it's hard to maintain and update things.
And a lot of buildings are just sort of big entities. The building automation system is expensive to replace. Totally know. Um, it's hard to shut a whole building off to put in a meter, you know, So let's say buildings have challenges, but I want to give, you know, credit where it's due on that.
Now the answer, why they are behind to the extent they are is manifold. And we came up with a good framework for it. Doug and I, when we were at Cushman, we came up with six things that we saw that the way we put it was. You know, what was preventing innovation in the built environment. Um, it's six things and I'll list them.
it's cost of entry or lack of clarity, thereof, lack of skilled labor, confusing vendor market, inadequate infrastructure, which is probably the place where buildings tend to fall behind. Is that one, that fourth one is a time to value and ROI ambiguity. Hmm. So those are the kind of categories we came up with.
And, I think that any program you're going to put in place, whether at a kind of company level or big program level, is going to need to address each of those in some way. What was the first one cost of entry or perceived cost of entry?
James Dice: [00:18:15] What do you mean
Aaron Lapsley: [00:18:15] by that? Well, look. It's expensive relative to the operating budget of a lot of existing buildings to do something outside of the capital upgrade cycle, the costs more than say, 5 cents a square foot, right.
That starts to raise people's eyes. And that's not a lot of money if you think about it right. In a million square foot office building, which is not most office buildings that is. 50 grand 50 grand. Right? So that's not a huge project. Now, if you can demonstrate savings on the back of that or make a change, can start to generate the ROI, but just literally the cost of entry in a lot of situations is more in this expectancy.
Buildings are not bonds it's like, right. But then you also may be. Spend 50 grand and can now all of a sudden do something like fall detection and diagnostics and find the 25% of your terminal units on average that aren't working and aren't providing air, you know, to the people in the building in certain situations.
So it may be worth it.
James Dice: [00:19:22] All right. So let's just go through the six again, we don't have to unpack all of them. Cost of entry, skilled labor.
Aaron Lapsley: [00:19:28] Yeah. Lack of skilled labor. I mean, I think this one's straightforward, but it's just in everyone that works in our value chain and building technology experiences this, but for something that, you know, Ā all my clients want, there's not very many people that can deliver it.
And particularly, I would say the biggest area where they're lacking, you know, somebody is looking for where to focus their time or build a skillset that is useful to the market. You know, if you took my sort of three stages of a program strategy, And, you know, implementation program management and then kind of the engineering or building level of technical things related to that.
It's the middle one where there's not enough people. There are not enough people that can actually develop, manage, and then implement a technology program across all facets. So including operational changes, change management, the technology vendors, building levels vendors, that part is that's really under-resourced.
Yeah, and
James Dice: [00:20:22] I call it the champion role and, my course is not hitting that yet. Uh, but that's, that's the bucket that we're focused on. I totally agree that we need more people that can navigate that, implementing the strategy, right?
Aaron Lapsley: [00:20:36] Yeah. Okay. Yeah. And when I worked for Glenn mutton at GPG advisors for a couple of years, and that is what they were really good at was developing a program and then just slogging through to get it done.
And so we did, I had the opportunity to do some amazing. No like this program we did with Todman as a retail Reese, based out of the Detroit area, over 20 large shopping center, there's full meter deployment, BAS data integration. They developed an entire centralized energy and operational database operations function.
The Ironman energy manager out of that. It was soup to nuts out of the ground and they funded it, but it needed to be delivered on. And, you know, we've got a crash course in actually doing that. Um, the next was confusing vendor markets. So this is one that we spent a lot of time on it, that pushed them in with the digital buildings practice.
And I know like JLL is very sophisticated, in this respect too. And I'm sure CVRE is too. I just don't have as much knowledge about it, but. There's a lot of companies doing a lot of things in prop tech and that's growing. And I get sorta tired of like hearing every year about how there's just too many to manage.
And it's so hard when there's 3000 companies that we're tracking. Yeah, that's true. The way to get through that is to talk to them all and try to develop frameworks and categories for what they do. Segment the market, understand how they were the same, how they're different. You know, try to try to put together some, Consolidated thought processes around, the relationships that your organization, whether it's, they'd like Cushman or those are small, like the company that I'm, I'm building now, you know, what kind of relationship we have with those vendors.
And then, you know, be the intermediary between the clients that know nothing about this or, or getting called by all those 3000 companies and what they actually need. Like, there's a lot of value in that I've heard from numerous clients over the last. Five That's of the services we bring that's valuable is being the lens, the filter on that.
Interesting. Yeah.
James Dice: [00:22:45] Yeah. I often play that role as well. you need somebody to do it. Uh, and what were the other two was that there are two more.
Aaron Lapsley: [00:22:54] Yeah, three more. Then the last two are kind of related to each other. That inadequate infrastructure is the fourth one and looked at. That obviously varies what I always remind people or try to encourage people who are thinking about particularly people that manage like a lot of real estate, multiple buildings, multiple cities, big portfolios, corporate or commercial is got to think of things in distribution.
Like as a first approximation, think of everything in a bell curve, at least just for a mental model. So if I say inadequate infrastructure, People, some segments that people are going to say, well, we've got great interests structure. It's like, okay. But think of it in terms of a bell curve, right? Because if you're a really big company, you know, if you're Brookfield, there's someone that's really big and got a lot of buildings.
You have different take any given type home technology network or. security system or building automation. There's some kind of distribution. If you ask them buildings that are great, you have some buildings that are still using pneumatic controls for everything. Not that that's bad, but it's certainly behind the time.
Um, and then you've got a lot stuck in the middle, right?
Yeah. Is the area where I get the most frustrated about the whole buildings are not bonds thing is it's like. If you have systems that are fundamental to keeping that revenue stream coming in for your fixed income assets, you need to maintain them. And everyone's used to doing that when they think of it, like I have the maintenance guy come out once a year for the chiller, you know, they're used to absorbing that technology doesn't work like that.
And operational technology doesn't work like that. It's increasingly needing. Updates regularly. And so Johnson controls is telling you to update meds once a quarter, because they're doing quarterly releases. Now. I don't know that they are, but you know, they're doing more rapid releases than they used to.
Very few people are doing that. They pretend like that building automation system is like a computer that they bought and they don't ever need to update in the windows. And they literally don't update windows on that computer in a lot of cases. Right. So it's like, it just doesn't, you know, OT is not concrete.
It needs to be treated. It doesn't just like live until it dies. Like there's care and feeding that needs to go into it. and so you know, that is one of the things we're building are behind. They need to treat their technology. More like a modern technology, not so much that they don't have it.
You know, we did a big survey when I was at Cushman on all the property management building. And it was like basically 95% of buildings in North America had additional building automation system. It was way higher number than I would get. Oh, wow. A big statistical sample, hundreds of buildings that responded in that survey, you know?
And so it's like, okay, you know, the buildings that a company like that are managing, it's not VAs. Um, but 25% still have new pneumatic controls in some form to if I remember the numbers. So there's this legacy of updating older parts of that, system. And the last two were just around basically ROI.
And so time to ROI ambiguity around ROI. How do you measure ROI? Um, can you measure the ROI and the way that the finance guys are used to, you know, that one you've got to tackle on an individual basis? the things that I learned the most from Douglas still leads the digital buildings group or digital advisory group at Cushman.
You know, with the kind of order of how to, to think about that and work with the clients on that. So, you know, and where and how you think about metrics to measure success. We struggled a lot with that in the early days of when I joined switch. And I think the whole industry has gotten a lot better about that now.
but you know, you still have to get to a level of comfort with each individual client about what ROI and how to, and how to measure it.
James Dice: [00:26:40] Yeah. Everybody's balance sheets, different everybody's income statements, different, everybody has different budgets, different ways. They slice their budgets, different room and, and different budgets.
Right? Uh, yeah, the whole business case is always custom. Yeah. Every, every product I've worked on it's custom.
Aaron Lapsley: [00:26:59] So also there are spots and, and perception of. Non quantitative metrics, you know, the qualitative things that come with a program, just that you're contributing to like kind of a greater good versus just measuring, like how much energy you say that each building also portfolio with that.
I mean, again, bell curve, right? So like, Sometimes I would, I used to say, like, I could go into any big commercial building and probably find like eight to 10% energy savings that like relatively low, no costs, you know, like CapEx style savings, right? Not like replace the chiller plants. I mean, you can always get savings in that.
And I think generally speaking, that was true. you know, I'm a bit more far removed from specifically doing like energy focus programs, but like, you can usually find that not much money, but Yeah, you'll get clients sometimes. They're like, why didn't we get 15% savings in every building?
And it's like, well, because again, like we did this at 20 buildings and some were really good, a few, some, we had a bigger savings than that. And really it's some kind of distribution that like approximates normal curve. Do you have to be really careful when you're cherry picking like pilot sites? You know, it's like, are you expecting to hit this number?
That is going to be an average at the two or three pilots sites we're doing out of your 50. Right. Then we need to very carefully select them, you know? And so there's just a lot of complexity in that.
James Dice: [00:28:21] Yeah. The other piece of business case complexity is around who accepts like what level of fluffiness.
Right. So we have metrics like productivity. And, different businesses accept different levels of scrutiny around those types of numbers. And which makes it really difficult as well. So like, energy's usually like a hard number and then the other ones are a little bit more, more fluffy and it's like, that's kind of bespoke as well.
Like tailoring that argument
Aaron Lapsley: [00:28:49] to each different building owner. That's the big deal with indoor air quality, you know, Yeah, I read healthy buildings over the summer. I think like a lot of us did Joseph Allen and John Ā from Harvard. John Machamer was my professor for two classes and the sponsor of my field study I did with industry while I was at HBS.
and he, John I'm sure was the one that did all this financial because he's the finance guy. Um, and he did a lot of those financial projections around, you know, essentially corporate HR calculations saying. Yeah, just sort of demonstrating the JLL three 30, 300 concepts that like, you know, your, your people and productivity matter way more than your energy budget, or even your real, estate costs, which I think we all know intuitively.
and I think the math is completely plausible and for the right audience, that type of spreadsheet makes a lot of sense. It is rare, unfortunately, that the incentives accrue to the building level. Or even the like FM team level or productivity. And so it, that is still a very hard case to make it, you know, in a lot of situations you have to get together stakeholders at a much higher level than we're often, you know, interacting with.
Totally.
James Dice: [00:30:05] Yeah. I teach it in the course is tangible versus non tangible. And you have to basically define that right. With your, with your stakeholder. Well, I love that list, but that's an awesome list. I've asked that question probably 30 times now. And, uh, that was the most detailed answer that I've gotten yet, which is, which is awesome.
Hey guys, just another quick note from our sponsor nexus labs. And then we'll get back to the show. This episode is brought to you by nexus foundations, our introductory course on the smart buildings industry. If you're new to the industry, this course is for you. If you're an industry vet, but want to understand how technology is changing things.
This course is also for you. The alumni are raving about the content, which they say pulls it all together, and they also love getting to meet the other students on the weekly zoom calls and in the private chat room, you can find out more about the course@courses.nexus lab. Start online. All right, back to the interview.
Um, I want to ask you, so one of the. Most popular episodes on this podcast has been with Google. so it was, um, Keith Burke had been, and, uh, Trevor Soto and, Trevor works for DB engineering. So he's a consultant to Google, but, I wanted to ask you about your experience. So you worked at Cushman Wakefield and supporting Google.
So can you kind of explain, uh, kind of what you, guys did there, and I'll probably have
Aaron Lapsley: [00:31:26] some follow up questions for you. I mean, I basically, fell into being a, An original member of that team. So I worked very closely with Keith and Keith team and Mark who Keith works for. and, alongside Trevor, you know, I know Trevor's worked with Darryl Smith, who was my client at Cushman, going back to his days at Microsoft CV really got off the ground at that scale, working, out of the rock at Microsoft and optimizing that campus.
And doing great work for Darryl. And then when Daryl came over to Google, DB came with him and was doing similar work. So I joined the CW account at the beginning of its third month. So a few of the people on the leadership team, of that account you know, they'd been working on sort of the transition and then it's been there for two months.
Um, DB team had worked alongside the people, uh, on the Cushman team that set up the centralized operations center, out there, for that portfolio, which has been very, very successful. You know, Cushman came off the ground, they're separating hard services and soft services, you know, out of the gate.
So if a Google employee at Google or submitted a ticket for any kind of hard services category through the ticketing system, You know, that routed through a different process than going to the site level, which is the way it would work at a lot of, you know, corporate real estate accounts. It would go to the person at the building or the region instead, it all goes, it's funneled centrally through the ops center.
So everything that we did was sort of around that lens and the operations center and, and, you know, DBS. Work was coordinated through and part of the budget of the, you know, the critical operations team out there. So it's a very interesting model was just super interesting. I incredibly. No fortunate. Um, I loved working with that team.
So the role I played really was to be again, kind of the program manager for what they set up. Um, and Google has done a lot of amazing work that sort of open source framework for building tagging that they developed, you know, based off brick and haystack and, um, That whole project was more on the software side, very much Trevor and, and Keith's world.
and I'm familiar with what they did, but I'm not really a software engineer per se. So
James Dice: [00:33:47] that was the crux of the interview with those two is like the ontology and mostly the side-to-side supervisory control
Aaron Lapsley: [00:33:53] and that thing. So I can, I contributed a significant amount in the way that they were thinking about that stuff, but Trevor's really on top of all of that.
And so what Trevor and I really worked together to do, and, and a lot of our team, you know, we had two project managers that worked on it. Two was to get the data out of the. Building automation system and do the integration project. Now we came in and they had some massive advantages out of the gate. I mean, Google has done an amazing job.
Dan and others out there has built a very standardized building automation system with a very high quality implementation. And they have the operation center out of Google, largely runs out of that building automation system. It's it's of a high enough quality that it does. A significant amount of, the sort of data platforming just through you know, lot ALC backnet VMs, there's some disadvantages to that.
And things that they're trying to work on alarming was still a big challenge. Things like that, that, you could get some of the big scale BMS challenges, but we. Basically selected the data points across all of these, this fairly standardized implementation and did the kind of analysis to integrate about 250,000 data points into the data Lake that they use to build that ontology.
Okay. So credit, good credit to Google for having standardized all that long before we ever got there. But that was still a very heavy lift. We had to work with their integration supplier, that box, they had to get backnet drivers written and tested women. We had, I mean, was that rolled out across, you know, when I left that account in April of 2019, and I last looked at that we had integrated like 165 buildings of data in nine months, you know?
And there was ongoing work around metering and verifying the meter calculations and things to make, you know, to make sure sub-metering was all correct. But there was like several thousands of meters that were going into that as well. And so that kind of got the plumbing set up for the data Lake, but then they were able to do interesting stuff on going forward.
James Dice: [00:35:52] Cool. I mean, yeah, that, whole implementation. And then interests me around it. So I've only talked to Trevor and Keith about it and now you about it, but what interests me is I'm seeing. I follow a lot of Google's sustainability efforts. And so seeing them sort of pushing the envelope and trying to get to 24, seven carbon free energy, they call it.
And then, hearing about what's happening, you know, actually in the field at the point level, uh, it's interesting watching, like imagining those two ends of the spectrum coming together, really for the, I haven't heard a lot of corporations. You know, number one, set that goal out, right. Carbon free energy and number two, say, okay, well obviously we have to figure out the controls in the buildings and the data aspect of this.
And, and it seems like they're really leaders on both of those types of things.
Aaron Lapsley: [00:36:41] Right now, Yeah. And a lot of those efforts aren't directly connected, but they're all part of the same vision. And I have to say as a company, they're interesting because they treat big and small almost with the same importance.
Like that was a really big integration project we did. But in a way, like to your point, it's all about kind of the micro level. Like how do we set up an apology? That's like a Thompson from the round to us. You know that we use it, whereas there's people that are working on like carbon offsets for, for 24, seven, you know, net zero energy certification.
So it really is super interesting. And a lot of the people we worked with on the energy side, I did quite a bit related to the utilities, budget, and energy management and things out. There were also people that had done a lot of. No wholesale energy procurement, you know, wind powered deals in the past, PPA and things like that.
So we're all related to offset. So it's a super sophisticated, you know, facilities team out there. And the cushion team is amazing too. Really, really good. I've worked with a lot of corporate real estate groups before across a lot of the different companies. That's a really strong theme. Awesome.
James Dice: [00:37:48] Cool. Well, I'll, I'll be attempting to pull more, of those types of people that are leading into the podcast.
So, we'll see. Um, do you want to, talk about a little, smart building strategy, next. Um, so. Can you just kind of give your definition of strategy. So earlier you were talking about strategy, basically implementing the strategy and then, engineering design, basically program management.
So, um, I'm assuming strategy in your mind comes before the program management. You have to create the strategy to then implement it. So how do you think
Aaron Lapsley: [00:38:18] about that? I mean, I, I think strategy is all about taking a step back and figuring out what you want to do and why you want to do it. Right. I mean, it's, it doesn't need to be many more complicated now strategy in general is the word that you can stuff a lot into.
Um, you know, I think there's just like, it's a suitcase work. Yeah. You can stuff a lot of different things into it's overused. you know, having gone through the MBA in management consulting world, like it's. It's almost meaning let's how much that word is used, but like concept is that it means you're zooming out and not thinking about the detail.
You're thinking about the planning and what you want. So like, there's a lot of useful frameworks to think about what is the general strategic vision for the company or the real estate group? What are you trying to accomplish? Why do you want to accomplish it? How do we then define that in some way?
Outcomes that are business metrics. Like we talked about qualitative or quantitative, how do we move that into a set of taking off the technology capabilities that. That will, will help us achieve those, outcomes or goals. And that's kind of an iterative process because sometimes you can get new business outcomes by having new technology capabilities, but in general, they kind of go together and then you just sort of move on from there.
And it's more of like a design style. Let's figure out what the tech needs to do, which use cases we want to select. You know, how do we want to improve the user experience for whoever the user groups are always important to note in real estate that we sometimes just assume who the user group is, but it's usually either people in the building that use the building as occupants, or it's the people that manage the building or analyze it, or kind of the backend process of it.
both are very important user bases. It's important to design for them. That kind of process of figuring that out in advance is really what a strategy phase is all about. Um, so, you know, really defining that out and then, taking that into a plan or a roadmap that starts to define what the, program is going to be.
James Dice: [00:40:17] Totally. And what do you think some of the challenges are for real estate groups with, with basically figuring stuff out in advance?
Aaron Lapsley: [00:40:25] Yeah, I mean that, there's a whole raft of challenges because usually people come in with a preconceived notion this based off of a vendor that sold something to them.
So one of the biggest challenges I encounter is like, Hey, do you know so-and-so. And it's like, yes. They're like, what do you think? Well, here's what I think. But like, I have to give you a nuanced answer because I really need to know what you want do to answer that, you know, so I think this about them.
I think that they do these things within this space that achieves these types of things. And they're probably good on this and maybe not good on this. But it looks like to
James Dice: [00:41:03] what you're trying to do. Yeah.
Aaron Lapsley: [00:41:05] Or they're just like, Oh, we just thought we'd buy it because it was good. Like this happened to us. A lot of this has happened to me a lot in every consulting type role I've got.
Yeah. So putting things in, in that context and zooming out, seeing the forest before you go into the trees is really important. And so that's kind of, the primary challenge is usually getting people to recognize that they need to take a step back and think it through, you know, having in the right state Culver's at the table is always a challenge because you always come into an organization usually through facilities or real estate, or if it's a commercial real estate group through an asset manager or an Ā person, or occasionally it's through like a central shared services function.
Um, that kind of manages this occasionally, maybe it's through the it group. it's almost never who you need to actually get that strategy in place. Right? I mean, basically almost never. Is it just a one-off building project, if it is, you've probably gone to an engineering consultant, you know, a pure-play engineering consultants to do it.
and in a lot of cases for a long time, that's meant that you got a kind of suboptimal outcome. For the broader portfolio. So like, we need to do a mobile bad Jack. That's controlling this building. And if that kind of comes through the property management team at that building, you're usually not thinking about how that can be applied to, the portfolio.
Right. Um, which is a minute. Yeah. So elevating to the right level, getting the right stakeholders in the room, always a challenge. It takes time. Part of the reason that this is slow because these are enterprise consulting, processes basically.
James Dice: [00:42:45] Yeah, yeah, absolutely. How do you help people with that? Cause I know strategy is one of the things that you're focusing on with system two.
Aaron Lapsley: [00:42:54] Yeah. you know, where required. I mean, there's a lot of other things, the strategists out there, people that focus on that, you know, so that doesn't necessarily need to come from us, but in a lot of cases, it does need to, because, you were brought in to look at a building or you were brought in to look at a specific type of system, and then it becomes clear that it's worth zooming out.
So, You know, it's about getting people to recognize the value in doing that, and then taking them through a, you know, a structured thinking process. It's, you know, modern strategy consulting is starting to look a lot more and more like a design process. I mean, those things are kind of converging in a way.
I don't mean like buildings design. I mean, like. The kind of ideation and thinking process. And so it depends on what the client wants to do if they really want to think through it holistically, it's going to start to look a lot more like a design. Well, it's like envision what the future could look like.
And then think about how we sort of back into that from where you are now. Um, sometimes it is more just about like building a financial model, you know? And so the, kind of strategies they should really be part of the program development phase, where it's like, look, we know we want to do these sets of things and likely if this targets set of buildings, what is it going to take to do that?
And it's more about kind of technology planning, you know, a lot more of what like a, a traditional technology consultants would.
James Dice: [00:44:11] Yeah. I think sometimes the ideation or the design phase might get skipped. But then you have to at least come back to the user engagement at some point, right? How is this fitting into the user's workflow?
How are we going to get them to use it? Like, like things like that still have to happen at some point. Right. And yeah. So like to think of that piece as like, can, can that be part of the strategy as well? Um, and it doesn't always happen upfront as well, and at least that's how we teach it. Sure. Of course.
Aaron Lapsley: [00:44:39] Yeah. Most of what prop tech is trying to do is. Fundamentally digital transformation of some variety. I mean, there's very few pure play. This just replaces something we already do, and it's fundamentally better. There's some of those, and those are companies that are actually very successful because they can build scaled channel businesses really quickly.
Right. But like that is the minority of prop tech businesses. Uh, and a lot of it is convincing people to do new things, which isn't inherently a transformation type of process. And so taking a step back and starting with the, like what we want to do and why and how we want to measure that. you know, it is an important step.
To take you know, again, you almost never one building, one technology, that's driving an initiative. It's two, usually. A category of things that they're looking at, a set of value drivers, like there's an ESG focus. What do we do to improve sustainability and highlights, transparent reporting or cost reduction or, you know, and then at that point it starts to look like management consulting, and then you're looking at enterprise value drivers and you need to let that float through.
Now you still have the lens on the technology market. We know the goal. A lot of times the goal is to be a more innovative organization. I mean, we have clients that just, if the innovation group or committee that are driving this, but then you still need go backwards from that and say, well, then what is it?
That's going to prove the innovation, right? Innovation of why are the reasons? Totally.
James Dice: [00:46:08] I think something, I also, I, I definitely struggle with the strategy like there's the inserting tech into a workflow. Like that's an easy way to create a use case for technology. But then the digital transformation piece is like, well, this workflow is messed up.
And we need to do this entire department differently. And I feel like that's, it's something I've struggled with in the course because smart buildings often require. Transformation of how we're doing things in the business today. And I've always tried for at least the course, which is an introductory course, tried to draw a boundary around, like, we're not talking about full-scale digital transformation in this course, but, um, the other piece I've struggled with is the, the aspect that You can implement one use case. Right. And that might require a certain technology stack. Right. but you could also use that same technology stack for 25 other use cases. And so now you're, kind of blowing up this strategy or this program. So how do you think about like, These different layers of technology when it comes to strategy.
Aaron Lapsley: [00:47:15] I think that that is one of the keys to thinking about a strategy, right? It's like ultimately like the solutions you select me to be part of an architecture that supports future goals. And so, you know, there's definitely things you want to measure in the short term. you know, we talked about ROI ambiguity as a challenge, but the best companies that are doing this are ones that are thinking about you know, that they understand the platform they're laying foundation and the building layers on that, that enable future capabilities down the line.
So take something like. No networking and building foundational backbone of anything connected into that can communicate on the network. All the things you hear about with monitoring and sensor technologies and, IOT solutions and data platforms, and even just metering and, and a lot of the experience related things.
Um, so modern access control systems that utilize mobile, visitor management solutions. Uh, digital signage, those things all benefit from having, you know, in a commercial building, setting a base building network or in a corporate setting, having like a dedicated V land for operational technology or however they set up their, their architecture.
Right. And so like that is a bottom layer type thing. And so, you know, there's a lot of frameworks, right? You can think of this, but You have to think of it in stages, right. That sort of begin with foundational layers, surpass the building at the edge, and then ultimately end up with people, process users, you know, change transformation at the top stage and in between are all the things we normally think about as technology, all the bits and pieces, the devices.
The protocols, how they communicate from edge cloud, cloud infrastructure itself, you know, the software layers that sit on top of that to do analytics or data processing the integrations between platforms. And at that point, that share and exchange data. I mean, I'm doing a project right now where I'm working with a corporate clients that.
Yeah. One of the things we've done is kind of specify a lot of the integrations to enable this, service, design architecture that's been developed for their workplace in the future. And it's a lot of integration, many lines in a spreadsheet to enable that. And so you've got to prioritize them and build them in a roadmap, you know, and that's all about those layers.
It took a lot of building up what all the foundational components were before we got to that level. We can say, well, these are the things that need to communicate with each other.
And and system thinking around how this stuff actually, inter operates a tricky thing to do. I mean, it's something that I've had to learn to, you know, to build the muscle around doing that for sure.
James Dice: [00:49:56] For sure. Ā And I think what you just talked about getting pulled into a project, I think there are so many of us that get pulled into projects. And if you look back upstream, that project doesn't have a strategy behind it.
Uh, I just feel like it's more and more it's needed more and more there like that zoom out conversation. And you don't want to, delay things because everyone wants to do a project. Right. But. Projects go better if they have some, some sort of backing behind them. Ā so I've seen you do a bunch of different posts on LinkedIn around reset.
and so I just wanted to talk about kind of like where IAQ is and March, 2021, because I, I haven't had any of my recent projects. working on IQ and I know it's just moving so rapidly due to COVID obviously. and I, would just want to get, like, basically pretend, I don't know anything about what's going on.
Tell me about reset. Tell me about what's going on with indoor air quality in our industry right now.
Aaron Lapsley: [00:50:55] Sure. Yeah. I mean, within the world of indoor air quality as a topic, you know, there's a big community. That's been involved with that and it's been, I think, somewhat boosts boutique and until the last couple of years.
And if you think that a couple of things have changed, okay. One is the indoor air quality monitor technology. The IOT solution side has evolved to the point where you can buy high quality commercial grade monitors. At a reasonable cost, you know, kind of real estate construction costs scale. So it's, just viable and it wasn't before, what sort of sensors the monitors.
So this is where reset comes into play. So within that IFU world, there are some standards. that are looking to sort of certify either space or technology product reset has been basically developed the, standard for a bunch of pieces of that monitoring value chain. So they've developed an accredited professional program.
I became accredited alone, several people from the sustainability and energy team on the commercial flight at Cushman in November, we did the class together. And so that's kind of like being a lead AP I'll talk in a minute about what those people would do, but they've also developed a, certification course commensurate with that for building.
So there's a commercial interior and according shell standard to get the plaque on the wall. Okay, but they've also developed a standard for the technology. So they've developed a monitor standard, which is for the actual sensors. Then they call like a group of sensors monitor. There's basically five variables, like the IAQ five that you measure or in any sort of leading indoor air quality sensor package, temperature, relative humidity, CO2.
Uh, PVOC smalls, organic compounds and, and particularly matter PM 2.5 as the standard. Some of them we'll throw in a CEO monitor like a COO alarm. Some of the outdoor sensors include things like, uh, inorganic gases, like NOx, nitrogen oxides that are outdoor pollution issues, but there's the Ā for the indoor monitors kind of the standard that sensor technology has come a long way, but there was no one that said, like this is a commercial grade monitor.
There were these consumer grade monitors that have some challenges technically on this, you know, just the quality of the sensors that were lab grade monitors, which were. You know, $10,000 lab type equipment. There wasn't a consumer grade monitor. They developed a standard for that. And a number of companies have developed products and become certified for that.
At the same time, they've developed the standard for the data platform side, which is essentially a data quality standard. So if you have a data platform, Like switches, you know, is an operational data platform, or it could be anything, right. some are big, some are small, some are part of vertically integrated IOT solution, but it has to just meet these standards.
That's to provide five minute interval data. If this frequency you have to connect it to the reset API, it has to aggregate five minute readings into 30 minute averages, according to the standard. And then they get certified after a period of time to basically be plugged into the reset cloud. And then all of the kind of analytics part of reset is automated.
So what an AP does is they will look at the projects, they just use what you need to do. These is where you need to put the monitors to get the, standard certification process started. Go help. Do that, get them deployed online. The data platform is already connected to reset. Um, And the data starts flowing and then basically reset is a hundred percent performance-based standards.
There's no checklists or certification about how to achieve it. It's just standard. These thresholds, within these parameters, basically for this period of time and you get certified and it's those five variables basically. Um, So it's, it's really super powerful, because it opens up flexibility for how people can actually comply with the standard.
There's other good IEQ standards out there. And you know, I'm doing some interesting work with aerated and it's out of the UK. Very interesting, uh, approach also has some performance based elements. They've developed a design and operations, more checklist stuff. One of the downsides of reset is if you don't think you're going to get it, you don't have a lot of incentive to go trust.
Because, you know, you put out the monitors and if you know, you're not going to hit it, you know, two numbers that you think you're, you're not, then it's like, well, I should do the project to remediate to get to where I'm going to achieve reset. And a lot of times people don't know how to do that. Right.
They need a checklist to do that or an engineer to come in and do the evaluation. So air rated very interesting. Uh, there, UL's got a program that I'm learning about right now. That's certifying space as well. So there's, there's other things going on out there, but, um, Definitely indoor environmental quality is becoming a much bigger percentage of mine share of the kind of sustainability certification.
Well that started with, well, you know, five, six years ago is it started to come into prominent. Lead has really, I think, focused, emphasized IEQ a lot more in the later versions of the standard, um, as well. so there's interesting stuff going on there.
James Dice: [00:56:06] You mentioned to me earlier about how I cube monitors.
Now I know what that term means, actually. Uh, it should be thought of more like meters than automation. What do you, what do you mean? Yeah.
Aaron Lapsley: [00:56:18] So if you were going to do say air quality monitoring historically, and there's still a lot of people I've talked to even recently to kind of have this perspective, they're like, why wouldn't I just integrate the sensors into my building automation system?
Or like, I've got a Jake that's ready. And like, I can just pull in the data there. Yes, technically, you can do that. But, um, there are some challenges around that CO2 sensors and especially the VOC sensors drift quite a bit. And so the commercial grade monitors when reset does that certification for them, they actually compare them to those great a, you know, tens of thousands of dollar lab monitors as they referenced.
So, so they are held to that, you know, you're, they're measured with very accurate lab style equipment and they have to hit a certain data accuracy for a certain period of time. It's, it's a rigorous process to get certified and dispenser that your BAS vendor is going to install has not gone through that process.
Let's just say that it also is missing some important, most likely it is missing some important software capabilities. Whether that's firmware at the box level or cloud-based monitored managed that is doing some of that recalibration. for those variables that tend to dress your bias over time.
so there's some disadvantages to doing it in your BAS. You know, I'm still always happy to see a building that has CO2 based demand control its own level, because you know that they're going to have. Good air quality in that conference room, better air quality if it's working right. Um, you then if it's just temperature based alone, but the sort of right way, the better way to maybe achieve that use case increasingly would be to go with a company like aware that has built a backnet version of their monitor and pull the data into the BAS directly, using a higher quality monitor.
For that plus then you get the other variants, you get the particulate matter, you get to be all the other things that matter. Um, so the reason it's more like a meter is because there's sort of two things that you want to pay attention to, to get good sense of IQ and the best analog for this is energy.
So if you want to get a good sense for what's going on with energy, you want meter on the, on the main building feeds and maybe some sub-meters, if they're high value. So desegregate category loads, and then you want to pay attention to the things that are using energy. So I still, a lot of times we'll go in with clients that are wanting to over sub meter, as it don't spend the money on all the extra sub meters, you get nothing from a marginal sub meter.
You might as well pay attention to the thing that's using 50 to 60% of your energy in the average building. And that's the HVAC. So you've moved much better off putting in place, HVAC fault detection and diagnostics or some sort of analytic capability that is, I mean, it's like your blood pressure. Like I don't need to take my blood pressure every five minutes.
If my blood pressure's high, I know what I need to do. I need to eat better and exercise and eat less salt and all those, you know, similar kind of situation. Right. So I excuse the exact same thing you want to monitor. The IAQ as an output of the processes that affect the people breathing in this space, the materials off gassing, the HVAC working or not working like it's supposed to, those are processes that produce air quality.
and so you want to monitor that like with a meter, you know, just like with electricity, like I still do want that main meter on the building and the useful sub-meters. I want to know what's going on. I want both. They're independent checks on each other. And so, you know, it really isn't, so much about where the data is integrated through.
I think the technical people kind of conflate that it's about the sort of purpose of the data. One is about seeing the output of the process of the building what's actually going on in the room or in the building. The other is about what's going on with the system that is sort of supposed to be managing that.
James Dice: [01:00:07] Yeah. And the BMS says everyone's heard on this podcast may complain about that. It's not very good, a steward of the data that once it gets in there to be able to measure the output and see analytics on it and things like that. So
Aaron Lapsley: [01:00:20] a little
James Dice: [01:00:21] bit over our time staff, the sense that we could go on forever. Aaron, so thanks so much. What are you excited about in 2021 that you're looking forward to.
Aaron Lapsley: [01:00:31] Well, I mean, I'm excited about starting this firm and really getting it off the ground and seeing the growth there and that's starting to happen.
So it's exciting. I'm also just really excited for a lot of my clients that I'm seeing have success and drive these types of initiatives. and a lot of them at the same time, a lot of companies on the supply side, you know, the, the prop tech vendors that are seeing acceleration. and what had been a, you know, kind of a slow market and, while real estate has taken a big hit here, commercial real estate.
Yeah. If anything, we've just seen that sort of a major, major shift in focus towards what the buildings actually do and how they work and whether or not they're providing the right experience, the right level of health. Um, and to some extent it's abstracted, you know, Building technology and prop tech away from just energy or very specific individual vertical value drivers to this sort of broader strategic perspective.
Like I need the building to be a sustainable, healthy, valuable assets that my customers, our tenants wants to use. Or in the case of a corporate real estate group, that's going to bring our employees back and provide them the experience that they deserve. You know, as the use cases for the built environment kind of change and shift here.
So it's, there's been a huge acceleration in that, the technologies part of that, but it's also just seeing real estate get better. Totally
James Dice: [01:02:02] love it. All right. Thanks so much for coming on the show and dropping your, your wisdom. Uh, best of luck with system two this year.
Aaron Lapsley: [01:02:10] Thanks Jen. Happy to do it.
James Dice: [01:02:12] 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@nexuslabs.online. You can find the show notes for this conversation there as well. Have a great day.
āBuildings are not bondsā¦ The key difference that I think a huge amount of the real estate industry does not appreciate is that a building is a product that people have to use. So it is a fixed income asset, but it is also a product that people need to be in, you know, for you to make money as an owner. And that is really, really evident right now.ā
āAaron Lapsley
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Episode 42 is a conversation with Aaron Lapsley, Founder of System2 Consulting.
We talked about Aaronās awesome resume in smart buildings, and I picked his brain on what heās learned from his years at Cushman & Wakefield, Switch Automation, and more.
Then we took a bit of a deep dive into smart building strategy, and Aaron gave me a buzzword- and hype-free update on what's going on in the world of IAQ and RESET in the COVID era.
You can find Aaron Lapsley on LinkedIn.
Enjoy!
Music credit: Dream Big by Audiobingerālicensed 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!
James Dice: [00:00:03] 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.
This episode of the podcast is brought to you by nexus pro nexus pro is an annual or monthly subscription where members get exclusive writing podcasts and invites to members only zoom gatherings. You can find info on how to join and support the Without further ado, please enjoy this episode, the nexus podcast.
Episode 42 is a conversation with Aaron Lapsley. founder of system two consulting. We talked about Erin's awesome resume and smart buildings. And I picked his brain on what he's learned from his years at Cushman Wakefield, switch automation, and more, then we took a bit of a deep dive into smart building strategy.
And Aaron gave me a buzzword and hype free update on what's going on in the world of IQ and reset in the COVID era. Without further ado, please enjoy nexus podcast, episode 42. Hey, Aaron, welcome to the nexus podcast. Can you introduce yourself for us?
Aaron Lapsley: [00:01:24] Yeah, sure. Thanks James. Happy to be here. Uh, my name is Erin Lapsley. I'm an engineer management consultant and general technologists, in real estate. And,
James Dice: [00:01:35] uh, I remember like when I first started the podcast, I talked to Deb Noller and he was, uh, Friend of both of ours, she told me to have you on.
And it took me almost a year to actually have you here. So that's great. Uh, can you kind of give us a background on your career and I want to dig into a lot of different areas of your career, but I think there are very few that have the sort of pedigree you have in our industry. So maybe take us through like a resume of all the cool stuff you've done.
Aaron Lapsley: [00:02:03] Sure. Yeah. I'll try and keep it brief. Um, yeah, and yeah, you know, had a huge impact on my career and the time I spent with, uh, with switch automation and even and I thought, you know, a lot of folks like that that has really made a big impact on me. Yeah. so I, I do appreciate her. So I have this strange sort of breadth of experience in, in real estate services.
I I've always worked around buildings or energy. So I started my career, um, a mechanical engineering student, uh, university of Oklahoma. I started out in the energy industry, upstream oil and gas. And so I worked for a year, uh, worked for a girl that company, worked, uh, some in the field. Uh, with a friend of mine, his family company, putting together surface equipment, uh, learning mostly.
and then I did the first year of a master's degree in petroleum engineering that I decided I didn't want to work in the oil and gas industry anymore. It was a rough time for the oil business in the, in the mid two thousands. So I, and my girlfriend at the time now my wife had moved up to New York. I wanted a big change of pace.
And so I moved up to New York without a job, and I wanted to get into, Engineering consulting and HVAC engineering, which I save that story for another day over a beer. But I did over a period of time. Short period of time to get into that industry. and had a very successful career with Lopez associates in New York.
So I designed HVAC in a lot of analysis. I got, uh, lead accredited before I got my professional engineering license in which was early days for lead. It was lead 2.1, I believe is what we took the test on. I actually had to pull my credential out the other day. It was remembering back. Um, and so, we were kind of starting the early stages of the like sustainable design studio and we're doing a lot of kind of project work to energy modeling, retrofits and upgrades, you know, constant work like that going on in New York.
And it got me very interested in the energy side of buildings. Um, and, Starting to tie those two things together. I ended up going to do an MBA. I went to Harvard business school was very fortunate to get in there. And that's just a, you know, an absurdly transformational experience that you don't get very often.
Um, and really, really accelerated my career. I ended up doing kind of a lot of people go into management consulting after an MBA. And if It's a two year continuation of business school. So I worked for Deloitte consulting for another year and a half or so.
And about half the time I worked in corporate real estate. Do they have a good corporate real estate practice? Now I got more exposure to the technology side. I should also say that. What got me into building tech in general is at HBS. We did a field study where you can substitute a project for a class, and it was with McKinstry up in Seattle that the design build operate, maintain contracts are really neat.
Fantastic company. And they had purchased the, uh, some of the engineering energy software assets from icon. And we're looking to explore what to do to build a business around active energy management. And there's a lot of companies that do that kind of work now, but it was early days in 2010 and we helped them with a strategy on that.
And it really got me thinking about that time about why we weren't doing centralized operations for real estate for so then just fast forwarding quickly ended up going to a boutique consultants, doing smart building programs, integrating BMX data, setting up centralized operation centers. Um, ended up going and working for switch automation was the first U S employees.
They came over from Sydney and LTE headquarters in San Francisco and, you know, had an amazing time their startup experience, you know, help them with product, help them build the services team. It's not flourishing and doing amazing things. Um, and then, I ended up going over to work for Darryl Smith, who had just brought in Cushman Wakefield is, is that them provider at Google after that.
Um, and that was kind of, another really amazing experience, on building technology. So did a variety of things, ran energy management, uh, ran a building technology program. We ultimately had this experience to be able to go in and do that at a corporate level for Cushman. which I'm sure we'll, we'll talk about more.
James Dice: [00:06:25] Absolutely. Ā mutual friend, Dennis Krieger who introduced us, uh, that, uh, you guys are big fans of each other, which is, which is fun. So shout out to Dennis for making this conversation happen. Uh, can you tell us about system two? So you left Cushman, recently and started your own thing system too.
So tell us, tell us what's up with that.
Aaron Lapsley: [00:06:46] Sure. Yeah. Um, start assisting to consulting, um, as a vehicle to do that engineering consulting work actually a number of years ago, and then hadn't done very much with it. really got it fired up in earnest, in November. After leaving, Cushman and, you know, look, I just saw a major opportunity to, to move into providing services directly to clients.
Um, and so starting to pursue that now, as a firm, you know, consulting and engineering firms, specializing in technology for the built environment, building systems, you know, working with designers, developers, owners, operators, so real estate, to improve. Building occupant experience, health and safety and, and, building performance, using data.
Digital solutions, focusing on technology strategy and programs through implementation and program deployment. And then also related engineering services, things like applying OT and IOT solutions, upgrades doing building technology assessments, and then, you know, related to high-performance buildings, doing HVAC optimization and retrofits upgrades.
and I think there's just, I I've seen from clients, I've talked to them about it a number of times, because there's a beneficial strategy, for me to be able to provide services that are into heads, because a lot of times there's not a very particularly well-managed handoff between those phases of the life cycle of a, you know, a building technology program.
So, As you kind of pointed out, I've got a bit of a strangely broad background that enables me to go from strategy through to sort of building level engineering. But you know, I'm starting to already see success in applying that model. Yeah, the
James Dice: [00:08:25] handoffs in our industry are, and that's one of the things I teach in the course.
It's like, there's so many different places for, for the handoffs to go wrong. That's definitely one of them. Yeah. Strategy too. I mean all the way to design, to operations. Exactly. cool. That's such an amazing background. Uh, so let's talk about, um, I mean, I'm excited to all the things we could potentially unpack here at the.
Question that I normally ask guests is why is technology in buildings so far behind say the technology in our pockets? And I want to add a second piece of that for you, which is your, your LinkedIn headline, which is. Maybe you can just share what your, your LinkedIn headline is as part of your, your
Aaron Lapsley: [00:09:09] answer.
I change it all the time. So I don't know which one you're referring. I try to keep it fresh. just as a rule, but I mean, I, think the most recent one, maybe the provocative one that you're referencing was challenging theory to be better. And then I I've got this hashtag I use the buildings are not bonds.
Yeah. Yeah. So the challenging CRE to be better part, I think is. It may be controversial to some people, but if people in our neck of the woods certainly understand that that's something that needs to be dyed. Buildings are not bonds. Is it really came from Really my time in real estate in general, but it's been particularly in the last like eight years or so from 2013 on, I really worked in the operational side of real estate.
So not so much, I had done lots of design and construction side stuff, but really the kind of operating building, how do we get data out of them? What do we do with it? How do we change operating processes? And. You know, in operating building margins are, are thin, a building is X fixed income assets. It is finance, or expected to perform in a way that is a fixed income asset, like a box, meaning there's a maximum that you're going to get out of a building on rent in any given year.
And there's a lot of downsides and not a huge amount of upside, but it's fairly predictable income. You know, stable, overcoming the, obviously disrupted right now in the office and retail sectors, but in general, these assets perform with a somewhat of a risk return profile of a, fixed income asset versus like an equity, but buildings are not bomb.
And oftentimes they are treated like bonds. They're securitized like bonds from a finance perspective. The key difference that I think a huge amount of the real estate industry does not appreciate is that a building is a product that people have to use. Yeah. So it is a, it is a fixed income asset, but it is a product that people need to be in and, you know, for you to make money as an owner.
And that is really, really evident right now. Um, every office tenant right now is reducing its portfolio or planning to, I mean, make no mistake about it. They're all reducing in some capacity. Very few are going up versus what their previous trajectory may have been. Even the big tech companies.
Right. Um, as people move towards hybrid. So Scott got, you know, we've been talking for awhile about dispersion in house, you know, commercial real estate, third largest asset class in the world is going to have this massive value transferred to residential real estate, which we've already seen in prices. I just experienced that.
Buying a house myself, and I think that's real now. I think maybe he's overplaying it a little bit. There will still be the need for, for assets, but the transition. You know, James, like for me, it shouldn't be just about like readjusting valuation of buildings and people taking a haircut on their bond.
It's about making the product something that people want to use. And there's a lot of things that we can unpack about that high level. I was using that hashtag before COVID because it's just a real problem. Like too many people that have way too much power. In real estate, have no idea what goes on in the actual buildings or how they work or what they do for the people that go.
James Dice: [00:12:27] Absolutely. So what are the, some of the ways that you would then educate them on that?
Aaron Lapsley: [00:12:33] Well, I mean, it's kind of starting to happen, you know, tenant experience as become or workplace experience for, corporate real estate groups. Is It's not a, an old concept, but it's not quite new either. And it's developed quite a bit, particularly in the last few years.
So, I mean, I think it's kind of starting to happen in some sense where I see a big lack of understanding though, around things that aren't just highlights like bullet points on a marketing sheet for a building, you know, like, does it have a gin? Does it have a cafe? Does it have an outdoor terrace?
That stuff is great and important part of an experience. There are other things that matter about how buildings were two things on the cost side that I know you and I have worked on for. You know, at least in my case, like a larger chunk of my career than maybe even I should have like very specific topics, topics around energy maintenance and, you know, sort of building optimization that stuff matters because of particularly because of the ESG investing on the CRE side, you know what I mean?
Like it's being pushed to the fork, but there's a lot of things about building operations. Just about what the, how it works to people don't think about necessarily at the forefront. No. How people get in and out of the building. So access control or management processes. Like if you look at the data that people like top Moto or lease manners, these companies that do this type of like worker's survey for the office sector, It's stuff that makes people lives easier.
That is always at the top of those surveys. And there's usually that gaps too. Um, so it's, you know, yeah. They they're happy to have an outdoor terrace too. but like I see a lot of 40 or $50 million lobby projects and office buildings where it's like, okay, but if you're not putting in like a modern mobile badging seamless to access control system, like yeah.
You're not really doing what you, you need, you know, to really improve the experience
James Dice: [00:14:26] you described. That piece is like, don't waste my time. Like, I have a very efficient life that I've designed inside my home. And when I go to the office, like, the building shouldn't waste my time. Right. And, that's how I've always phrased it as like, it there's so much friction in an average building, from this point to that point, to this point, you know?
So
Aaron Lapsley: [00:14:45] yeah. Can we touch on your question about why technology is behind them? Yeah. So that was
James Dice: [00:14:50] like, buildings are not bonds. That's one reason. W What's your broader answer? Yeah.
Aaron Lapsley: [00:14:54] Well, I, I was thinking about this, you know, because I, I knew you would ask that question and I've done a lot with like, sort of corporate technology in general.
Um, particularly I think back to what I was doing with Deloitte and some of what we were doing with technology programs when I was at Cushman. When you're working for a corporate real estate client in general, even when you're working in the workplace side, you end up talking about the rest of their tech infrastructure in some way, shape or form.
And it gives me this perspective that I'm not sure that like us having an iPhone in our pocket is a fair comparison for buildings. I think that the question of whether or not like. technology is behind any buildings is like relative to what? And if you view it relative to the average enterprise technology stack, even for a company, you know who I won't name, but ought to be expected to be held to a higher standard, it can be very unsophisticated.
No, that's not to say that buildings aren't behind in some cyber security is an area where I think a lot of buildings are definitely behind, but that's because in a way, buildings were one of the first things that actually had connected systems to the internet. So I've said this before, like the concept of IOT.
buildings had essentially what we call IOT like 30 years ago. Yeah. I mean, and it's become more common to have it connected for remote monitoring by your BAS vendor and energy management company or for your building engineers to look it up at home. That's relative becoming more common. More new, but there were networks systems of connected devices in buildings before.
Just about everything other than say manufacturing and industrial. Yeah. So like building in a way, adopted technology early. And then now it's hard to upgrade. It's expensive to upgrade. Over time. And that's the same with most big companies. You know, one of the issues is that big is hard to maintain when you're big, it's hard to maintain and update things.
And a lot of buildings are just sort of big entities. The building automation system is expensive to replace. Totally know. Um, it's hard to shut a whole building off to put in a meter, you know, So let's say buildings have challenges, but I want to give, you know, credit where it's due on that.
Now the answer, why they are behind to the extent they are is manifold. And we came up with a good framework for it. Doug and I, when we were at Cushman, we came up with six things that we saw that the way we put it was. You know, what was preventing innovation in the built environment. Um, it's six things and I'll list them.
it's cost of entry or lack of clarity, thereof, lack of skilled labor, confusing vendor market, inadequate infrastructure, which is probably the place where buildings tend to fall behind. Is that one, that fourth one is a time to value and ROI ambiguity. Hmm. So those are the kind of categories we came up with.
And, I think that any program you're going to put in place, whether at a kind of company level or big program level, is going to need to address each of those in some way. What was the first one cost of entry or perceived cost of entry?
James Dice: [00:18:15] What do you mean
Aaron Lapsley: [00:18:15] by that? Well, look. It's expensive relative to the operating budget of a lot of existing buildings to do something outside of the capital upgrade cycle, the costs more than say, 5 cents a square foot, right.
That starts to raise people's eyes. And that's not a lot of money if you think about it right. In a million square foot office building, which is not most office buildings that is. 50 grand 50 grand. Right? So that's not a huge project. Now, if you can demonstrate savings on the back of that or make a change, can start to generate the ROI, but just literally the cost of entry in a lot of situations is more in this expectancy.
Buildings are not bonds it's like, right. But then you also may be. Spend 50 grand and can now all of a sudden do something like fall detection and diagnostics and find the 25% of your terminal units on average that aren't working and aren't providing air, you know, to the people in the building in certain situations.
So it may be worth it.
James Dice: [00:19:22] All right. So let's just go through the six again, we don't have to unpack all of them. Cost of entry, skilled labor.
Aaron Lapsley: [00:19:28] Yeah. Lack of skilled labor. I mean, I think this one's straightforward, but it's just in everyone that works in our value chain and building technology experiences this, but for something that, you know, Ā all my clients want, there's not very many people that can deliver it.
And particularly, I would say the biggest area where they're lacking, you know, somebody is looking for where to focus their time or build a skillset that is useful to the market. You know, if you took my sort of three stages of a program strategy, And, you know, implementation program management and then kind of the engineering or building level of technical things related to that.
It's the middle one where there's not enough people. There are not enough people that can actually develop, manage, and then implement a technology program across all facets. So including operational changes, change management, the technology vendors, building levels vendors, that part is that's really under-resourced.
Yeah, and
James Dice: [00:20:22] I call it the champion role and, my course is not hitting that yet. Uh, but that's, that's the bucket that we're focused on. I totally agree that we need more people that can navigate that, implementing the strategy, right?
Aaron Lapsley: [00:20:36] Yeah. Okay. Yeah. And when I worked for Glenn mutton at GPG advisors for a couple of years, and that is what they were really good at was developing a program and then just slogging through to get it done.
And so we did, I had the opportunity to do some amazing. No like this program we did with Todman as a retail Reese, based out of the Detroit area, over 20 large shopping center, there's full meter deployment, BAS data integration. They developed an entire centralized energy and operational database operations function.
The Ironman energy manager out of that. It was soup to nuts out of the ground and they funded it, but it needed to be delivered on. And, you know, we've got a crash course in actually doing that. Um, the next was confusing vendor markets. So this is one that we spent a lot of time on it, that pushed them in with the digital buildings practice.
And I know like JLL is very sophisticated, in this respect too. And I'm sure CVRE is too. I just don't have as much knowledge about it, but. There's a lot of companies doing a lot of things in prop tech and that's growing. And I get sorta tired of like hearing every year about how there's just too many to manage.
And it's so hard when there's 3000 companies that we're tracking. Yeah, that's true. The way to get through that is to talk to them all and try to develop frameworks and categories for what they do. Segment the market, understand how they were the same, how they're different. You know, try to try to put together some, Consolidated thought processes around, the relationships that your organization, whether it's, they'd like Cushman or those are small, like the company that I'm, I'm building now, you know, what kind of relationship we have with those vendors.
And then, you know, be the intermediary between the clients that know nothing about this or, or getting called by all those 3000 companies and what they actually need. Like, there's a lot of value in that I've heard from numerous clients over the last. Five That's of the services we bring that's valuable is being the lens, the filter on that.
Interesting. Yeah.
James Dice: [00:22:45] Yeah. I often play that role as well. you need somebody to do it. Uh, and what were the other two was that there are two more.
Aaron Lapsley: [00:22:54] Yeah, three more. Then the last two are kind of related to each other. That inadequate infrastructure is the fourth one and looked at. That obviously varies what I always remind people or try to encourage people who are thinking about particularly people that manage like a lot of real estate, multiple buildings, multiple cities, big portfolios, corporate or commercial is got to think of things in distribution.
Like as a first approximation, think of everything in a bell curve, at least just for a mental model. So if I say inadequate infrastructure, People, some segments that people are going to say, well, we've got great interests structure. It's like, okay. But think of it in terms of a bell curve, right? Because if you're a really big company, you know, if you're Brookfield, there's someone that's really big and got a lot of buildings.
You have different take any given type home technology network or. security system or building automation. There's some kind of distribution. If you ask them buildings that are great, you have some buildings that are still using pneumatic controls for everything. Not that that's bad, but it's certainly behind the time.
Um, and then you've got a lot stuck in the middle, right?
Yeah. Is the area where I get the most frustrated about the whole buildings are not bonds thing is it's like. If you have systems that are fundamental to keeping that revenue stream coming in for your fixed income assets, you need to maintain them. And everyone's used to doing that when they think of it, like I have the maintenance guy come out once a year for the chiller, you know, they're used to absorbing that technology doesn't work like that.
And operational technology doesn't work like that. It's increasingly needing. Updates regularly. And so Johnson controls is telling you to update meds once a quarter, because they're doing quarterly releases. Now. I don't know that they are, but you know, they're doing more rapid releases than they used to.
Very few people are doing that. They pretend like that building automation system is like a computer that they bought and they don't ever need to update in the windows. And they literally don't update windows on that computer in a lot of cases. Right. So it's like, it just doesn't, you know, OT is not concrete.
It needs to be treated. It doesn't just like live until it dies. Like there's care and feeding that needs to go into it. and so you know, that is one of the things we're building are behind. They need to treat their technology. More like a modern technology, not so much that they don't have it.
You know, we did a big survey when I was at Cushman on all the property management building. And it was like basically 95% of buildings in North America had additional building automation system. It was way higher number than I would get. Oh, wow. A big statistical sample, hundreds of buildings that responded in that survey, you know?
And so it's like, okay, you know, the buildings that a company like that are managing, it's not VAs. Um, but 25% still have new pneumatic controls in some form to if I remember the numbers. So there's this legacy of updating older parts of that, system. And the last two were just around basically ROI.
And so time to ROI ambiguity around ROI. How do you measure ROI? Um, can you measure the ROI and the way that the finance guys are used to, you know, that one you've got to tackle on an individual basis? the things that I learned the most from Douglas still leads the digital buildings group or digital advisory group at Cushman.
You know, with the kind of order of how to, to think about that and work with the clients on that. So, you know, and where and how you think about metrics to measure success. We struggled a lot with that in the early days of when I joined switch. And I think the whole industry has gotten a lot better about that now.
but you know, you still have to get to a level of comfort with each individual client about what ROI and how to, and how to measure it.
James Dice: [00:26:40] Yeah. Everybody's balance sheets, different everybody's income statements, different, everybody has different budgets, different ways. They slice their budgets, different room and, and different budgets.
Right? Uh, yeah, the whole business case is always custom. Yeah. Every, every product I've worked on it's custom.
Aaron Lapsley: [00:26:59] So also there are spots and, and perception of. Non quantitative metrics, you know, the qualitative things that come with a program, just that you're contributing to like kind of a greater good versus just measuring, like how much energy you say that each building also portfolio with that.
I mean, again, bell curve, right? So like, Sometimes I would, I used to say, like, I could go into any big commercial building and probably find like eight to 10% energy savings that like relatively low, no costs, you know, like CapEx style savings, right? Not like replace the chiller plants. I mean, you can always get savings in that.
And I think generally speaking, that was true. you know, I'm a bit more far removed from specifically doing like energy focus programs, but like, you can usually find that not much money, but Yeah, you'll get clients sometimes. They're like, why didn't we get 15% savings in every building?
And it's like, well, because again, like we did this at 20 buildings and some were really good, a few, some, we had a bigger savings than that. And really it's some kind of distribution that like approximates normal curve. Do you have to be really careful when you're cherry picking like pilot sites? You know, it's like, are you expecting to hit this number?
That is going to be an average at the two or three pilots sites we're doing out of your 50. Right. Then we need to very carefully select them, you know? And so there's just a lot of complexity in that.
James Dice: [00:28:21] Yeah. The other piece of business case complexity is around who accepts like what level of fluffiness.
Right. So we have metrics like productivity. And, different businesses accept different levels of scrutiny around those types of numbers. And which makes it really difficult as well. So like, energy's usually like a hard number and then the other ones are a little bit more, more fluffy and it's like, that's kind of bespoke as well.
Like tailoring that argument
Aaron Lapsley: [00:28:49] to each different building owner. That's the big deal with indoor air quality, you know, Yeah, I read healthy buildings over the summer. I think like a lot of us did Joseph Allen and John Ā from Harvard. John Machamer was my professor for two classes and the sponsor of my field study I did with industry while I was at HBS.
and he, John I'm sure was the one that did all this financial because he's the finance guy. Um, and he did a lot of those financial projections around, you know, essentially corporate HR calculations saying. Yeah, just sort of demonstrating the JLL three 30, 300 concepts that like, you know, your, your people and productivity matter way more than your energy budget, or even your real, estate costs, which I think we all know intuitively.
and I think the math is completely plausible and for the right audience, that type of spreadsheet makes a lot of sense. It is rare, unfortunately, that the incentives accrue to the building level. Or even the like FM team level or productivity. And so it, that is still a very hard case to make it, you know, in a lot of situations you have to get together stakeholders at a much higher level than we're often, you know, interacting with.
Totally.
James Dice: [00:30:05] Yeah. I teach it in the course is tangible versus non tangible. And you have to basically define that right. With your, with your stakeholder. Well, I love that list, but that's an awesome list. I've asked that question probably 30 times now. And, uh, that was the most detailed answer that I've gotten yet, which is, which is awesome.
Hey guys, just another quick note from our sponsor nexus labs. And then we'll get back to the show. This episode is brought to you by nexus foundations, our introductory course on the smart buildings industry. If you're new to the industry, this course is for you. If you're an industry vet, but want to understand how technology is changing things.
This course is also for you. The alumni are raving about the content, which they say pulls it all together, and they also love getting to meet the other students on the weekly zoom calls and in the private chat room, you can find out more about the course@courses.nexus lab. Start online. All right, back to the interview.
Um, I want to ask you, so one of the. Most popular episodes on this podcast has been with Google. so it was, um, Keith Burke had been, and, uh, Trevor Soto and, Trevor works for DB engineering. So he's a consultant to Google, but, I wanted to ask you about your experience. So you worked at Cushman Wakefield and supporting Google.
So can you kind of explain, uh, kind of what you, guys did there, and I'll probably have
Aaron Lapsley: [00:31:26] some follow up questions for you. I mean, I basically, fell into being a, An original member of that team. So I worked very closely with Keith and Keith team and Mark who Keith works for. and, alongside Trevor, you know, I know Trevor's worked with Darryl Smith, who was my client at Cushman, going back to his days at Microsoft CV really got off the ground at that scale, working, out of the rock at Microsoft and optimizing that campus.
And doing great work for Darryl. And then when Daryl came over to Google, DB came with him and was doing similar work. So I joined the CW account at the beginning of its third month. So a few of the people on the leadership team, of that account you know, they'd been working on sort of the transition and then it's been there for two months.
Um, DB team had worked alongside the people, uh, on the Cushman team that set up the centralized operations center, out there, for that portfolio, which has been very, very successful. You know, Cushman came off the ground, they're separating hard services and soft services, you know, out of the gate.
So if a Google employee at Google or submitted a ticket for any kind of hard services category through the ticketing system, You know, that routed through a different process than going to the site level, which is the way it would work at a lot of, you know, corporate real estate accounts. It would go to the person at the building or the region instead, it all goes, it's funneled centrally through the ops center.
So everything that we did was sort of around that lens and the operations center and, and, you know, DBS. Work was coordinated through and part of the budget of the, you know, the critical operations team out there. So it's a very interesting model was just super interesting. I incredibly. No fortunate. Um, I loved working with that team.
So the role I played really was to be again, kind of the program manager for what they set up. Um, and Google has done a lot of amazing work that sort of open source framework for building tagging that they developed, you know, based off brick and haystack and, um, That whole project was more on the software side, very much Trevor and, and Keith's world.
and I'm familiar with what they did, but I'm not really a software engineer per se. So
James Dice: [00:33:47] that was the crux of the interview with those two is like the ontology and mostly the side-to-side supervisory control
Aaron Lapsley: [00:33:53] and that thing. So I can, I contributed a significant amount in the way that they were thinking about that stuff, but Trevor's really on top of all of that.
And so what Trevor and I really worked together to do, and, and a lot of our team, you know, we had two project managers that worked on it. Two was to get the data out of the. Building automation system and do the integration project. Now we came in and they had some massive advantages out of the gate. I mean, Google has done an amazing job.
Dan and others out there has built a very standardized building automation system with a very high quality implementation. And they have the operation center out of Google, largely runs out of that building automation system. It's it's of a high enough quality that it does. A significant amount of, the sort of data platforming just through you know, lot ALC backnet VMs, there's some disadvantages to that.
And things that they're trying to work on alarming was still a big challenge. Things like that, that, you could get some of the big scale BMS challenges, but we. Basically selected the data points across all of these, this fairly standardized implementation and did the kind of analysis to integrate about 250,000 data points into the data Lake that they use to build that ontology.
Okay. So credit, good credit to Google for having standardized all that long before we ever got there. But that was still a very heavy lift. We had to work with their integration supplier, that box, they had to get backnet drivers written and tested women. We had, I mean, was that rolled out across, you know, when I left that account in April of 2019, and I last looked at that we had integrated like 165 buildings of data in nine months, you know?
And there was ongoing work around metering and verifying the meter calculations and things to make, you know, to make sure sub-metering was all correct. But there was like several thousands of meters that were going into that as well. And so that kind of got the plumbing set up for the data Lake, but then they were able to do interesting stuff on going forward.
James Dice: [00:35:52] Cool. I mean, yeah, that, whole implementation. And then interests me around it. So I've only talked to Trevor and Keith about it and now you about it, but what interests me is I'm seeing. I follow a lot of Google's sustainability efforts. And so seeing them sort of pushing the envelope and trying to get to 24, seven carbon free energy, they call it.
And then, hearing about what's happening, you know, actually in the field at the point level, uh, it's interesting watching, like imagining those two ends of the spectrum coming together, really for the, I haven't heard a lot of corporations. You know, number one, set that goal out, right. Carbon free energy and number two, say, okay, well obviously we have to figure out the controls in the buildings and the data aspect of this.
And, and it seems like they're really leaders on both of those types of things.
Aaron Lapsley: [00:36:41] Right now, Yeah. And a lot of those efforts aren't directly connected, but they're all part of the same vision. And I have to say as a company, they're interesting because they treat big and small almost with the same importance.
Like that was a really big integration project we did. But in a way, like to your point, it's all about kind of the micro level. Like how do we set up an apology? That's like a Thompson from the round to us. You know that we use it, whereas there's people that are working on like carbon offsets for, for 24, seven, you know, net zero energy certification.
So it really is super interesting. And a lot of the people we worked with on the energy side, I did quite a bit related to the utilities, budget, and energy management and things out. There were also people that had done a lot of. No wholesale energy procurement, you know, wind powered deals in the past, PPA and things like that.
So we're all related to offset. So it's a super sophisticated, you know, facilities team out there. And the cushion team is amazing too. Really, really good. I've worked with a lot of corporate real estate groups before across a lot of the different companies. That's a really strong theme. Awesome.
James Dice: [00:37:48] Cool. Well, I'll, I'll be attempting to pull more, of those types of people that are leading into the podcast.
So, we'll see. Um, do you want to, talk about a little, smart building strategy, next. Um, so. Can you just kind of give your definition of strategy. So earlier you were talking about strategy, basically implementing the strategy and then, engineering design, basically program management.
So, um, I'm assuming strategy in your mind comes before the program management. You have to create the strategy to then implement it. So how do you think
Aaron Lapsley: [00:38:18] about that? I mean, I, I think strategy is all about taking a step back and figuring out what you want to do and why you want to do it. Right. I mean, it's, it doesn't need to be many more complicated now strategy in general is the word that you can stuff a lot into.
Um, you know, I think there's just like, it's a suitcase work. Yeah. You can stuff a lot of different things into it's overused. you know, having gone through the MBA in management consulting world, like it's. It's almost meaning let's how much that word is used, but like concept is that it means you're zooming out and not thinking about the detail.
You're thinking about the planning and what you want. So like, there's a lot of useful frameworks to think about what is the general strategic vision for the company or the real estate group? What are you trying to accomplish? Why do you want to accomplish it? How do we then define that in some way?
Outcomes that are business metrics. Like we talked about qualitative or quantitative, how do we move that into a set of taking off the technology capabilities that. That will, will help us achieve those, outcomes or goals. And that's kind of an iterative process because sometimes you can get new business outcomes by having new technology capabilities, but in general, they kind of go together and then you just sort of move on from there.
And it's more of like a design style. Let's figure out what the tech needs to do, which use cases we want to select. You know, how do we want to improve the user experience for whoever the user groups are always important to note in real estate that we sometimes just assume who the user group is, but it's usually either people in the building that use the building as occupants, or it's the people that manage the building or analyze it, or kind of the backend process of it.
both are very important user bases. It's important to design for them. That kind of process of figuring that out in advance is really what a strategy phase is all about. Um, so, you know, really defining that out and then, taking that into a plan or a roadmap that starts to define what the, program is going to be.
James Dice: [00:40:17] Totally. And what do you think some of the challenges are for real estate groups with, with basically figuring stuff out in advance?
Aaron Lapsley: [00:40:25] Yeah, I mean that, there's a whole raft of challenges because usually people come in with a preconceived notion this based off of a vendor that sold something to them.
So one of the biggest challenges I encounter is like, Hey, do you know so-and-so. And it's like, yes. They're like, what do you think? Well, here's what I think. But like, I have to give you a nuanced answer because I really need to know what you want do to answer that, you know, so I think this about them.
I think that they do these things within this space that achieves these types of things. And they're probably good on this and maybe not good on this. But it looks like to
James Dice: [00:41:03] what you're trying to do. Yeah.
Aaron Lapsley: [00:41:05] Or they're just like, Oh, we just thought we'd buy it because it was good. Like this happened to us. A lot of this has happened to me a lot in every consulting type role I've got.
Yeah. So putting things in, in that context and zooming out, seeing the forest before you go into the trees is really important. And so that's kind of, the primary challenge is usually getting people to recognize that they need to take a step back and think it through, you know, having in the right state Culver's at the table is always a challenge because you always come into an organization usually through facilities or real estate, or if it's a commercial real estate group through an asset manager or an Ā person, or occasionally it's through like a central shared services function.
Um, that kind of manages this occasionally, maybe it's through the it group. it's almost never who you need to actually get that strategy in place. Right? I mean, basically almost never. Is it just a one-off building project, if it is, you've probably gone to an engineering consultant, you know, a pure-play engineering consultants to do it.
and in a lot of cases for a long time, that's meant that you got a kind of suboptimal outcome. For the broader portfolio. So like, we need to do a mobile bad Jack. That's controlling this building. And if that kind of comes through the property management team at that building, you're usually not thinking about how that can be applied to, the portfolio.
Right. Um, which is a minute. Yeah. So elevating to the right level, getting the right stakeholders in the room, always a challenge. It takes time. Part of the reason that this is slow because these are enterprise consulting, processes basically.
James Dice: [00:42:45] Yeah, yeah, absolutely. How do you help people with that? Cause I know strategy is one of the things that you're focusing on with system two.
Aaron Lapsley: [00:42:54] Yeah. you know, where required. I mean, there's a lot of other things, the strategists out there, people that focus on that, you know, so that doesn't necessarily need to come from us, but in a lot of cases, it does need to, because, you were brought in to look at a building or you were brought in to look at a specific type of system, and then it becomes clear that it's worth zooming out.
So, You know, it's about getting people to recognize the value in doing that, and then taking them through a, you know, a structured thinking process. It's, you know, modern strategy consulting is starting to look a lot more and more like a design process. I mean, those things are kind of converging in a way.
I don't mean like buildings design. I mean, like. The kind of ideation and thinking process. And so it depends on what the client wants to do if they really want to think through it holistically, it's going to start to look a lot more like a design. Well, it's like envision what the future could look like.
And then think about how we sort of back into that from where you are now. Um, sometimes it is more just about like building a financial model, you know? And so the, kind of strategies they should really be part of the program development phase, where it's like, look, we know we want to do these sets of things and likely if this targets set of buildings, what is it going to take to do that?
And it's more about kind of technology planning, you know, a lot more of what like a, a traditional technology consultants would.
James Dice: [00:44:11] Yeah. I think sometimes the ideation or the design phase might get skipped. But then you have to at least come back to the user engagement at some point, right? How is this fitting into the user's workflow?
How are we going to get them to use it? Like, like things like that still have to happen at some point. Right. And yeah. So like to think of that piece as like, can, can that be part of the strategy as well? Um, and it doesn't always happen upfront as well, and at least that's how we teach it. Sure. Of course.
Aaron Lapsley: [00:44:39] Yeah. Most of what prop tech is trying to do is. Fundamentally digital transformation of some variety. I mean, there's very few pure play. This just replaces something we already do, and it's fundamentally better. There's some of those, and those are companies that are actually very successful because they can build scaled channel businesses really quickly.
Right. But like that is the minority of prop tech businesses. Uh, and a lot of it is convincing people to do new things, which isn't inherently a transformation type of process. And so taking a step back and starting with the, like what we want to do and why and how we want to measure that. you know, it is an important step.
To take you know, again, you almost never one building, one technology, that's driving an initiative. It's two, usually. A category of things that they're looking at, a set of value drivers, like there's an ESG focus. What do we do to improve sustainability and highlights, transparent reporting or cost reduction or, you know, and then at that point it starts to look like management consulting, and then you're looking at enterprise value drivers and you need to let that float through.
Now you still have the lens on the technology market. We know the goal. A lot of times the goal is to be a more innovative organization. I mean, we have clients that just, if the innovation group or committee that are driving this, but then you still need go backwards from that and say, well, then what is it?
That's going to prove the innovation, right? Innovation of why are the reasons? Totally.
James Dice: [00:46:08] I think something, I also, I, I definitely struggle with the strategy like there's the inserting tech into a workflow. Like that's an easy way to create a use case for technology. But then the digital transformation piece is like, well, this workflow is messed up.
And we need to do this entire department differently. And I feel like that's, it's something I've struggled with in the course because smart buildings often require. Transformation of how we're doing things in the business today. And I've always tried for at least the course, which is an introductory course, tried to draw a boundary around, like, we're not talking about full-scale digital transformation in this course, but, um, the other piece I've struggled with is the, the aspect that You can implement one use case. Right. And that might require a certain technology stack. Right. but you could also use that same technology stack for 25 other use cases. And so now you're, kind of blowing up this strategy or this program. So how do you think about like, These different layers of technology when it comes to strategy.
Aaron Lapsley: [00:47:15] I think that that is one of the keys to thinking about a strategy, right? It's like ultimately like the solutions you select me to be part of an architecture that supports future goals. And so, you know, there's definitely things you want to measure in the short term. you know, we talked about ROI ambiguity as a challenge, but the best companies that are doing this are ones that are thinking about you know, that they understand the platform they're laying foundation and the building layers on that, that enable future capabilities down the line.
So take something like. No networking and building foundational backbone of anything connected into that can communicate on the network. All the things you hear about with monitoring and sensor technologies and, IOT solutions and data platforms, and even just metering and, and a lot of the experience related things.
Um, so modern access control systems that utilize mobile, visitor management solutions. Uh, digital signage, those things all benefit from having, you know, in a commercial building, setting a base building network or in a corporate setting, having like a dedicated V land for operational technology or however they set up their, their architecture.
Right. And so like that is a bottom layer type thing. And so, you know, there's a lot of frameworks, right? You can think of this, but You have to think of it in stages, right. That sort of begin with foundational layers, surpass the building at the edge, and then ultimately end up with people, process users, you know, change transformation at the top stage and in between are all the things we normally think about as technology, all the bits and pieces, the devices.
The protocols, how they communicate from edge cloud, cloud infrastructure itself, you know, the software layers that sit on top of that to do analytics or data processing the integrations between platforms. And at that point, that share and exchange data. I mean, I'm doing a project right now where I'm working with a corporate clients that.
Yeah. One of the things we've done is kind of specify a lot of the integrations to enable this, service, design architecture that's been developed for their workplace in the future. And it's a lot of integration, many lines in a spreadsheet to enable that. And so you've got to prioritize them and build them in a roadmap, you know, and that's all about those layers.
It took a lot of building up what all the foundational components were before we got to that level. We can say, well, these are the things that need to communicate with each other.
And and system thinking around how this stuff actually, inter operates a tricky thing to do. I mean, it's something that I've had to learn to, you know, to build the muscle around doing that for sure.
James Dice: [00:49:56] For sure. Ā And I think what you just talked about getting pulled into a project, I think there are so many of us that get pulled into projects. And if you look back upstream, that project doesn't have a strategy behind it.
Uh, I just feel like it's more and more it's needed more and more there like that zoom out conversation. And you don't want to, delay things because everyone wants to do a project. Right. But. Projects go better if they have some, some sort of backing behind them. Ā so I've seen you do a bunch of different posts on LinkedIn around reset.
and so I just wanted to talk about kind of like where IAQ is and March, 2021, because I, I haven't had any of my recent projects. working on IQ and I know it's just moving so rapidly due to COVID obviously. and I, would just want to get, like, basically pretend, I don't know anything about what's going on.
Tell me about reset. Tell me about what's going on with indoor air quality in our industry right now.
Aaron Lapsley: [00:50:55] Sure. Yeah. I mean, within the world of indoor air quality as a topic, you know, there's a big community. That's been involved with that and it's been, I think, somewhat boosts boutique and until the last couple of years.
And if you think that a couple of things have changed, okay. One is the indoor air quality monitor technology. The IOT solution side has evolved to the point where you can buy high quality commercial grade monitors. At a reasonable cost, you know, kind of real estate construction costs scale. So it's, just viable and it wasn't before, what sort of sensors the monitors.
So this is where reset comes into play. So within that IFU world, there are some standards. that are looking to sort of certify either space or technology product reset has been basically developed the, standard for a bunch of pieces of that monitoring value chain. So they've developed an accredited professional program.
I became accredited alone, several people from the sustainability and energy team on the commercial flight at Cushman in November, we did the class together. And so that's kind of like being a lead AP I'll talk in a minute about what those people would do, but they've also developed a, certification course commensurate with that for building.
So there's a commercial interior and according shell standard to get the plaque on the wall. Okay, but they've also developed a standard for the technology. So they've developed a monitor standard, which is for the actual sensors. Then they call like a group of sensors monitor. There's basically five variables, like the IAQ five that you measure or in any sort of leading indoor air quality sensor package, temperature, relative humidity, CO2.
Uh, PVOC smalls, organic compounds and, and particularly matter PM 2.5 as the standard. Some of them we'll throw in a CEO monitor like a COO alarm. Some of the outdoor sensors include things like, uh, inorganic gases, like NOx, nitrogen oxides that are outdoor pollution issues, but there's the Ā for the indoor monitors kind of the standard that sensor technology has come a long way, but there was no one that said, like this is a commercial grade monitor.
There were these consumer grade monitors that have some challenges technically on this, you know, just the quality of the sensors that were lab grade monitors, which were. You know, $10,000 lab type equipment. There wasn't a consumer grade monitor. They developed a standard for that. And a number of companies have developed products and become certified for that.
At the same time, they've developed the standard for the data platform side, which is essentially a data quality standard. So if you have a data platform, Like switches, you know, is an operational data platform, or it could be anything, right. some are big, some are small, some are part of vertically integrated IOT solution, but it has to just meet these standards.
That's to provide five minute interval data. If this frequency you have to connect it to the reset API, it has to aggregate five minute readings into 30 minute averages, according to the standard. And then they get certified after a period of time to basically be plugged into the reset cloud. And then all of the kind of analytics part of reset is automated.
So what an AP does is they will look at the projects, they just use what you need to do. These is where you need to put the monitors to get the, standard certification process started. Go help. Do that, get them deployed online. The data platform is already connected to reset. Um, And the data starts flowing and then basically reset is a hundred percent performance-based standards.
There's no checklists or certification about how to achieve it. It's just standard. These thresholds, within these parameters, basically for this period of time and you get certified and it's those five variables basically. Um, So it's, it's really super powerful, because it opens up flexibility for how people can actually comply with the standard.
There's other good IEQ standards out there. And you know, I'm doing some interesting work with aerated and it's out of the UK. Very interesting, uh, approach also has some performance based elements. They've developed a design and operations, more checklist stuff. One of the downsides of reset is if you don't think you're going to get it, you don't have a lot of incentive to go trust.
Because, you know, you put out the monitors and if you know, you're not going to hit it, you know, two numbers that you think you're, you're not, then it's like, well, I should do the project to remediate to get to where I'm going to achieve reset. And a lot of times people don't know how to do that. Right.
They need a checklist to do that or an engineer to come in and do the evaluation. So air rated very interesting. Uh, there, UL's got a program that I'm learning about right now. That's certifying space as well. So there's, there's other things going on out there, but, um, Definitely indoor environmental quality is becoming a much bigger percentage of mine share of the kind of sustainability certification.
Well that started with, well, you know, five, six years ago is it started to come into prominent. Lead has really, I think, focused, emphasized IEQ a lot more in the later versions of the standard, um, as well. so there's interesting stuff going on there.
James Dice: [00:56:06] You mentioned to me earlier about how I cube monitors.
Now I know what that term means, actually. Uh, it should be thought of more like meters than automation. What do you, what do you mean? Yeah.
Aaron Lapsley: [00:56:18] So if you were going to do say air quality monitoring historically, and there's still a lot of people I've talked to even recently to kind of have this perspective, they're like, why wouldn't I just integrate the sensors into my building automation system?
Or like, I've got a Jake that's ready. And like, I can just pull in the data there. Yes, technically, you can do that. But, um, there are some challenges around that CO2 sensors and especially the VOC sensors drift quite a bit. And so the commercial grade monitors when reset does that certification for them, they actually compare them to those great a, you know, tens of thousands of dollar lab monitors as they referenced.
So, so they are held to that, you know, you're, they're measured with very accurate lab style equipment and they have to hit a certain data accuracy for a certain period of time. It's, it's a rigorous process to get certified and dispenser that your BAS vendor is going to install has not gone through that process.
Let's just say that it also is missing some important, most likely it is missing some important software capabilities. Whether that's firmware at the box level or cloud-based monitored managed that is doing some of that recalibration. for those variables that tend to dress your bias over time.
so there's some disadvantages to doing it in your BAS. You know, I'm still always happy to see a building that has CO2 based demand control its own level, because you know that they're going to have. Good air quality in that conference room, better air quality if it's working right. Um, you then if it's just temperature based alone, but the sort of right way, the better way to maybe achieve that use case increasingly would be to go with a company like aware that has built a backnet version of their monitor and pull the data into the BAS directly, using a higher quality monitor.
For that plus then you get the other variants, you get the particulate matter, you get to be all the other things that matter. Um, so the reason it's more like a meter is because there's sort of two things that you want to pay attention to, to get good sense of IQ and the best analog for this is energy.
So if you want to get a good sense for what's going on with energy, you want meter on the, on the main building feeds and maybe some sub-meters, if they're high value. So desegregate category loads, and then you want to pay attention to the things that are using energy. So I still, a lot of times we'll go in with clients that are wanting to over sub meter, as it don't spend the money on all the extra sub meters, you get nothing from a marginal sub meter.
You might as well pay attention to the thing that's using 50 to 60% of your energy in the average building. And that's the HVAC. So you've moved much better off putting in place, HVAC fault detection and diagnostics or some sort of analytic capability that is, I mean, it's like your blood pressure. Like I don't need to take my blood pressure every five minutes.
If my blood pressure's high, I know what I need to do. I need to eat better and exercise and eat less salt and all those, you know, similar kind of situation. Right. So I excuse the exact same thing you want to monitor. The IAQ as an output of the processes that affect the people breathing in this space, the materials off gassing, the HVAC working or not working like it's supposed to, those are processes that produce air quality.
and so you want to monitor that like with a meter, you know, just like with electricity, like I still do want that main meter on the building and the useful sub-meters. I want to know what's going on. I want both. They're independent checks on each other. And so, you know, it really isn't, so much about where the data is integrated through.
I think the technical people kind of conflate that it's about the sort of purpose of the data. One is about seeing the output of the process of the building what's actually going on in the room or in the building. The other is about what's going on with the system that is sort of supposed to be managing that.
James Dice: [01:00:07] Yeah. And the BMS says everyone's heard on this podcast may complain about that. It's not very good, a steward of the data that once it gets in there to be able to measure the output and see analytics on it and things like that. So
Aaron Lapsley: [01:00:20] a little
James Dice: [01:00:21] bit over our time staff, the sense that we could go on forever. Aaron, so thanks so much. What are you excited about in 2021 that you're looking forward to.
Aaron Lapsley: [01:00:31] Well, I mean, I'm excited about starting this firm and really getting it off the ground and seeing the growth there and that's starting to happen.
So it's exciting. I'm also just really excited for a lot of my clients that I'm seeing have success and drive these types of initiatives. and a lot of them at the same time, a lot of companies on the supply side, you know, the, the prop tech vendors that are seeing acceleration. and what had been a, you know, kind of a slow market and, while real estate has taken a big hit here, commercial real estate.
Yeah. If anything, we've just seen that sort of a major, major shift in focus towards what the buildings actually do and how they work and whether or not they're providing the right experience, the right level of health. Um, and to some extent it's abstracted, you know, Building technology and prop tech away from just energy or very specific individual vertical value drivers to this sort of broader strategic perspective.
Like I need the building to be a sustainable, healthy, valuable assets that my customers, our tenants wants to use. Or in the case of a corporate real estate group, that's going to bring our employees back and provide them the experience that they deserve. You know, as the use cases for the built environment kind of change and shift here.
So it's, there's been a huge acceleration in that, the technologies part of that, but it's also just seeing real estate get better. Totally
James Dice: [01:02:02] love it. All right. Thanks so much for coming on the show and dropping your, your wisdom. Uh, best of luck with system two this year.
Aaron Lapsley: [01:02:10] Thanks Jen. Happy to do it.
James Dice: [01:02:12] 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@nexuslabs.online. You can find the show notes for this conversation there as well. Have a great day.
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