Podcast
67
min read
James Dice

🎧 #141: CRE Market Talk #2 with Mandi Wedin and Joe Gaspardone

March 9, 2023
"So many organizations are selling ESG solutions, but very few have their own ESG statements, goals, or positions. If you don't want it, why would I?"

—Mandi Wedin

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Episode 141 is a conversation with Mandi Wedin of Feroce Real Estate Advisors and Joe Gaspardone of Montgomery Technologies.

Summary

This is the second edition of the CRE Market Talks. In this episode, we talked about what the CRE market is up to right now and how that relates to and affects the implementation and deployment of smart building technology.

Without further ado, please enjoy the Nexus podcast with Mandi Wedin and Joe Gaspardone.

Mentions and Links

  1. Montgomery Technologies (1:21)
  2. Feroce Real Estate Advisors (2:07)
  3. 🎧 #138: Rosy Khalife (4:16)
  4. 🎧 #135: Cliff Majersik (8:39)
  5. 🎧 #071: DEI Today in the Smart Buildings Industry (12:23)
  6. 🎧 #139: Joe Aamidor and Jeanne Casey (56:10)
  7. Twitter thread (56:13)
  8. Dinners with Ruth by Nina Totenberg (1:02:55)
  9. Hyperion by Dan Simmons (1:03:38)
  10. Ted Lasso (1:04:57)
  11. Shrinking (1:05:16)

You can find Mandi and Joe on LinkedIn.

Enjoy!

Highlights

  • Joe's introduction (1:05)
  • Mandi's introduction (2:01)
  • ESG+R and why we care (4:21)
  • How DEI fits into ESG+R (12:26)
  • Greenwashing from the investor's perspective (17:01)
  • Green bonds (22:15)
  • More transparency in the EU (28:23)
  • How ESG+R pressures are impacting the smart building market (32:38)
  • Macro market update (40:21)
  • The best strategies for the technology marketplace right now (47:51)
  • Carveouts (59:33)

  • 👋 That's all for this week. See you next Thursday!

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    1. Take our shortcut to learning the Smart Buildings industry here (300 students and counting)

    2. Join our community of smart buildings nerds and gamechangers here (nearly 500 members and counting)

    3. (NEW) Join the Nexus Labs Syndicate on Angellist for opportunities to invest in the best smart buildings startups that cross my desk each month.

    4. (NEW) Our Partner Hub is launching soon. This is an opportunity to be featured on our website, get original content, and tap into the Nexus community. Visit our partner page. Email us at partners@nexuslabs.online


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

    Full transcript

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

    [00:00:31] James: Hello and welcome to the Nexus podcast. This is another edition of the C R E Market talks. I think this is our second version of this quarterly podcast series. I have Joe Gasper and Mandy Whedon here. Um, we're gonna talk about today, you know, first of all what the CRE market is up to right now, and how that relates to and affects the implementation and deployment of smart building technology.

    We're gonna use ES [00:01:00] g R to set the context a little bit. Um, first, let's do some intros. For those of you that haven't met Joe and Mandy, both of them have been on the podcast individually as guests. And then again, this is the second time we've done this with the three of us together. Joe, why don't you go first and introduce

    yourself.

    [00:01:19] Joe Gaspardone: got it. Joe Gasper, COO of Montgomery Technologies. Montgomery's a. Uh, infrastructure primarily, uh, provider to commercial real estate converged networks, which is happily now a term that's more widely understood and known. Um, and we've been, been doing that for 20 years. Um, I also have a close to two decade, uh, career in commercial real estate.

    Before that, that is all about almost every role in commercial real estate operations at one point or another. So, um, so we're gonna leverage that on the market talk.

    [00:01:56] James: All right, over to you, Mandy.[00:02:00]

    [00:02:00] Mandi Wedin: Awesome. Nice to see you both. Hello, my name is Mandy Whedon. I am the founder and CEO of Furs Real Estate Advisors, where we advise forward, think. Companies to position their portfolios, their buildings, and their teams to succeed during times of disruption. Over the course of my 20 plus year running 20 plus year career, running multi-billion dollar portfolios, I built and led high performing investment management and diverse investment management teams.

    And today at Ferro, we work at the intersection with our clients where we can create value out of the commercial real estate industry's, uh, collision with technology. Collision. With E S G R, I had the R for resilience and consumer demographics changing consumer demographics. Glad to be here for number two.

    I'm glad We

    made

    it, Joe. We

    made it through the first one

    [00:02:55] Joe Gaspardone: Yeah, you never know. That first one is a high bar. Could get the [00:03:00] ax

    [00:03:00] James: Yeah, you didn't get ax. We're back again. Uh, yeah. No, we got great feedback on the first one, I think. You guys both are super involved in obviously the implementation of technology, but you also have that lens about how real estate markets and real estate investors and real estate owners actually think.

    And I think that sort of intersection of things I'm playing the sort of one that is still learning, that's my role here. Uh, that side of the, the, the way to think about smart building technology. And I should say thank you to you both. You, you both have been super involved in Nexus Pro and Nexus Foundations and sort of helping me bring that perspective to, you know, obviously the events that we do, you both have taught SME workshops on your different expertises.

    Uh, so

    thank you.

    [00:03:49] Mandi Wedin: You're welcome.

    [00:03:50] Joe Gaspardone: You're, you're the one guy moving this world forward in a way that is different from the past, and I think both Mandy and I [00:04:00] appreciate that Nexus is trying to do it right and do it differently and, and it's working.

    [00:04:07] James: thank you. Trying to, and, and no longer one guy anymore either. Uh, Rosie is here now. Uh, those of you that haven't met Rosie yet can check out the podcast we did together a couple weeks ago. Um, let's jump in. So let's start with E S G R and, and Mandy, this is an area where you and I talked about this on the podcast like a year and a half ago, something like that.

    Right. And I'd say that it was hyped up then, and it's even more hyped up now. I think what's been interesting lately is when you look at the headlines, there's like a political, uh, commentary happening around it as well. I don't know that it was happening as much back then, but it seems like there's been, uh, some pushback.

    Can you just kind of describe what's going on with the headlines and all the press and attention that E S G R is getting right now?

    [00:04:58] Mandi Wedin: Sure. [00:05:00] Yep. So I will say that, um, yes, there are a lot of headlines, but regardless of what the newspapers and media's saying, E S G R is here to say the horses left the barn. So we have to figure out how to engage with it to get the best results. And, uh, it's a, it's a tool, it's a acronym that's being used to serve different purposes.

    And so it's possible that we won't call it E S G in two years. Right. We'll have, uh, evolved and used a different word. I don't know what it is. You can, you can patent or trademark the one you think that's gonna win, but,

    [00:05:35] James: Please

    [00:05:36] Mandi Wedin: it potentially could be something different, but I think it's important to level set what it is.

    Right. And many of you who have heard me talk about this before, it hasn't. What it is, hasn't changed. Right. At the base of it, it is a comprehensive approach that investors use. To evaluate investment decisions through a [00:06:00] framework, an E S G R framework, to achieve both strong risk adjusted returns and positive societal impact.

    You need both, and you need both to, to both meet the needs today without compromising the future. And the four pillars are interconnected. Environmental right steward of nature. Social criteria evaluates how you manage relationships, community, customers governance deals with your leadership and your executive pay, and your oversight and shareholder rights and resilience is how businesses, properties, investments are prepared to manage through risk adverse events, as well as capitalize on opportunities. And at the core, it hasn't changed. It's about creating long-term value, the managing risk, building resiliency, and providing transparency and accountability. It's, it's, our conversation is different now because it has, um, [00:07:00] made headlines and been used as a tool, but the investors, lenders, employees, tenants, and regulators are still demanding it, and that pressure is only increased, right?

    We can talk about it as hype or we can talk about it as pressure. It's only increased, and I give two numbers when I talk about it from a carrot and a stick perspective. One is 121 trillion US dollars, and that represents the owners and investors who are signatories to the N P R I, the United Nations Principles for Responsible Investment, 121 trillion signed a public commitment to integrate ESG into their investment and ownership decisions.

    That's a huge number that's grown significantly in the last two years.

    [00:07:49] James: And that's assets under management of all of the signatories.

    [00:07:53] Mandi Wedin: Mm-hmm. And then 48% is my other number. This is the stick side of it that's [00:08:00] regulation around decarbonization at the local jurisdiction level. And then disclosure, um, requirements, most notably the SEC's ruling that'll come in April, but 48% of the buildings that were, that received a grade under New York City's local law 97 last year received a D or an F. That's a really hard score to have when you're trying to go and sell your building or refinance it or negotiate a renewal with your tenant. So that's a big stick regardless of your disclosure requirements.

    [00:08:36] James: Right, right. And we've talked about mandatory laws and other podcasts most recently with Cliff Majek, talking about all the different ways in which these regulations come into play. Um, can we talk about, okay, these targets have been set 121 trillion, Can we talk about how that trickles down into how does this meet the, you know, hit the operations?

    How does this [00:09:00] hit an individual building?

    [00:09:02] Joe Gaspardone: that's, that's, that's really where, you know, the rubber meets the road and it's, it's a tall, tall task right now because everybody kind of understands the E or when you talk about D E I, they understand the D diversity and there are metrics you can quantify energy and diversity. But then when you get to the SG and the EI of those two acronym.

    you're in a, uh, a much more, um, opaque world today. That's not to say that it won't iron itself out over time, but it really is difficult to say, how am I progressing? Are there standards, are there metrics? Are there quantifiable ways I can show this? As opposed to writing a 20 page narrative about what we're doing?

    And so that's still a lot. That's the area that's still under development, and [00:10:00] that is quite frankly, a struggle for, uh, a lot of people. You've got lenders, you know, you've got the money that's committing to these goals. You've got occupiers and tenants that are committing to these. At that level, you've.

    Individual management companies that are committing and ownership, that's committing. So everybody's making, you know, putting their flag in the sand. But how do you, how do you then show that in a somewhat standardized way? And that's, that's sort of where we are today, is, is working through the struggle of showing that progress in a way that everybody agrees is, is, is a standard

    [00:10:42] Mandi Wedin: I agree.

    [00:10:43] James: and what I've seen recently, sorry, what we see, I think annual, we see these annual reports, right? You see an annual report from uh, uh, and it's kind of like the person writing that report decided what [00:11:00] was gonna be reported and what numbers we're gonna be reported, and whether that number's good or not, and whether that progress is being celebrated.

    And it, yeah, it's right now it's like everyone's trying to feel out what's good and then it seems like what's good is also the, it's also ratcheting up. The expectations are ratcheting up over time. Each year is like, well, what was good in 2019 is probably not good right now. And so that's, that's making it more difficult to sort of wade through what it means to be successful in this area.

    [00:11:31] Joe Gaspardone: Totally. I I think part of that struggle too is, um, you, you, it's very much like a smart building, right? Um, what was smart in 2019 would not necessarily be the same standard today. And it's, you can apply the, where we are with esg, the same as technology in that these are works in progress and they're wor, they're really happening in parallel, but, but very much along [00:12:00] the same kind of timeline with the same learning curves, development curves.

    So I just think that, you know, there's, there's no shying away from it. That's where we are. But the good news is all parties are sort of committing to it and around it. And so that bodes well for the future. It's just gonna be a little bit bumpy for a while. yeah,

    [00:12:20] James: yeah, a hundred percent. So, Manny, Joe mentioned d e i. You do a lot of work in, in this area. We've had our, our own. , uh, webinar and podcast on this, conversa on that conversation, can you talk about kind of how d e I fits into the E S G R conversation?

    [00:12:38] Mandi Wedin: Sure. Yeah. So from, uh, an investor's perspective or a risk analysis perspective, d e i is one of the pieces of the robust E S G R strategy. And it can be housed under the S pillar or under the G pillar. And it's also in R right, cuz it's, they're all interconnected. And if you [00:13:00] have a access to, um, a broad-based talent pool and you have, um, a strong program where you grow and retain your employees and your talent, your organization is better equipped to respond to exogenous shocks and it, you can perform better.

    And you've heard me say this, we use a lot of tech to underwrite our investments, but at the end of the day, the investment decision is made by a human. And we want a better informed decision. We have more inputs, more viewpoints, more lived experiences. We can make a better decision to get better results.

    And when we widen our field division, we bring more people, more viewpoints, more perspectives to the table. We see more opportunities and we see more risks, and we see more ways forward. And to Joe's point, right, diversity, equity, inclusion, belonging, those are all words that we use today to talk about widening that field of vision and [00:14:00] the population, the workforce is changing drastically.

    This is a point that some organizations are feeling today, and some will feel tomorrow, but there will be, and there are actually on the Gen Z side, there are 300,000 fewer people who are turning 18 each year compared to 10 years ago. So there's a smaller incoming cohort. We're producing fewer workers defined as an 18 year old, and then on the other end of the spectrum, by the end of this decade, by 2030, all of the baby boomers.

    Will have turned 65 or older. So that's the sh retiring piece. That's the shrinking other end of the spectrum. So what's in the middle, right? That's the workforce that you have in the middle. That's also probably your user and creator of your real estate or your technology. And that, um, is where the talent war lies today. And if you don't have a [00:15:00] business practice that can manage that risk well then you're at a disadvantage.

    [00:15:07] Joe Gaspardone: And I think that's a looming crisis almost that, um, as Mandy said, some people are seeing and feeling. , but the numbers don't lie. I mean, the age out that's going to occur on the, on the high end is real, gonna be extremely hard to replace. If you looked at it today, based on the resources and development of new people coming in and skills, skill sets coming in, it's a massive lift that is, has been chronically kind of under-resourced over time.

    So, so that, that is another challenge. It's, it's going to be very, very hard to replace, um, the, the skill sets and the personnel across commercial, commercial real estate operations. [00:16:00] And, um, you know, maybe, maybe robots will take some piece of that, but I don't think enough,

    [00:16:06] James: Yeah,

    [00:16:07] Joe Gaspardone: that will not take it either.

    [00:16:10] Mandi Wedin: no , not our, it's not the, uh, golden solution. But I mean, think about it from a real estate investment perspective, right? Fewer 18 year olds means there'll be fewer household formations happening in. Decade. Right? And household formation is a hugely important metric that we follow for residential, both, um, to own and to rent.

    So understanding who your renter is, who your customer is, uh, is important, and how many of them are there, and where do they choose to work, and how do they choose to work? All important to your underlying investment criteria.

    [00:16:46] Joe Gaspardone: Yep.

    [00:16:47] James: Totally. Um, anything else on that topic before we move on?

    [00:16:54] Mandi Wedin: So much more. But let's move on.

    [00:16:56] Joe Gaspardone: There's always more.

    [00:16:58] James: [00:17:00] I think one of the other things that, since Mandy, you and I have talked about, Since we talked about it, one of the other things that's popped up a lot recently is greenwashing. So can you talk about where we're at? I mean, it's in the new, in the headlines a ton right now. Um, people getting called out, people getting shamed, I'd say a little bit, uh, sometimes for good reason.

    Right. Can you talk a little bit about how greenwashing fits into this equation and maybe talk about it from the investor's perspective.

    [00:17:33] Mandi Wedin: Sure. Okay. So, um, Joe noted, right? And you noted that what, what we're, what organizations of the industry, what investment managers are committing to do is sometimes very tightly defined because then they can meet it or talk about it, or they don't actually set a target, they just talk about what their values are and what their, um, philosophies are.

    So that's a lot of [00:18:00] that is avoiding greenwashing, right? Avoiding the headline, shame of You said X and then you did y we wanna know what happened. Right? Those are hard conversations. Um, um, I would say transparency matters a lot, so, as things have changed in your organization with your underlying budgets, with your d e I targets, with your decarbonization plans, with your board, uh, diversity composition, make the statement that it's different and here's what it's going to be going forward instead of ignoring it.

    Cuz otherwise you get a greenwashing label. And that's, um, that, and then, so if you, if you're the in pension fund, you're the ultimate money on making in allocation decisions on behalf of pensioners. You're allocating dollars to different investment managers, different in [00:19:00] investments. If the allocation, you've made an allocation to an organization that then has a big greenwashing scandal slash headline, that reflects really poorly on the pension fund and the advisor who made that, or the owner who made that.

    So don't ever embarrass your clients. Don't embarrass yourself. And so that those are the opportunities that organizations have right now.

    [00:19:23] Joe Gaspardone: Yeah.

    [00:19:24] James: of the things I think is interesting here, this came up in this morning's pro member gathering where it's actually, and then we've talked about it a little bit with how hard it is right now to actually operationalize E S G R is, and you hinted on it a little bit there, Mandy, if, if we're actually getting in, we as a real estate organization, we're actually getting into the weeds and we're saying, how are we gonna get to this target that we've set?

    And then we realize that that's actually really, really hard. Um, you're saying it might be time to come out and say like, here is what we're dealing with and being transparent about how hard it actually is [00:20:00] to get to that target that you've set. Is that what you're saying?

    [00:20:02] Mandi Wedin: Yeah.

    [00:20:04] Joe Gaspardone: Yeah.

    I, I think too, it goes a little. that, I, I feel, uh, I, it seems to me that in the market market as a whole, there's very little tolerance at the moment for mistakes. And I think that when you're trying to get from where we are to this very, very difficult to achieve goal, there needs to be a little bit of tolerance.

    People need a pass for making a mistake and being able to be transparent about it to a degree. And right now you see the market saying, well, you know, here I I, I'm meeting these e s G goals in my life sciences organization. Uh, we're above the industry, you. Benchmark, the industry average. It's like, well, that average is horrendous.

    So that doesn't really tell you're, you're [00:21:00] basically taking, you know, it's the cherry picking of statistics to spin a narrative to get yourself some points where, where I think where we really would benefit is saying, okay, we know where we are in this process. Let's, let's let people make mistakes and not just come crashing down on them because the industry as a whole is not developed enough and we're trying, and, and to give people a pass for honest effort would probably be very, very helpful over the ensuing two to three years.

    I, I think that that's, that would be my ask, especially commercial real estate where you're juggling so many challenges at once, right now, so many not just the business model and the economics. But technology and E s G, and, and it's all happening at the same time, just as the market is tanking. So it's just like, like give everybody, just, we're all ev you know, there, there are honest efforts being [00:22:00] made, but if it isn't exactly right, let's just, we should be strong enough to say, okay, we, we didn't realize that now we're doing this.

    [00:22:09] James: totally. So related to this greenwashing conversation, Mandy, you had a recent LinkedIn post, which i, I liked a lot. Um, you were talking about green bonds a little bit, and I I think you were also talking about why greenwashing is profitable now, but it won't be profitable in the future. Can, can you explain that, but also talk about, I I think there's a certain portion of this audience that might think they know what green bonds means.

    And can you just talk about what that even is to begin with, to start the conversation?

    [00:22:43] Mandi Wedin: Sure. Um, yeah, so I did thank you for, um, reading my LinkedIn post. It was, uh, it felt really, uh, wonky, geeky, but, um, it

    [00:22:55] James: struck me as a conversation that you were having in private and you were like, other people [00:23:00] need to

    learn this. I I do that a

    lot too, and

    I like those. I like

    [00:23:03] Joe Gaspardone: it was horrifying.

    [00:23:06] Mandi Wedin: Yeah.

    that too. So what's a green bond? A, a green bond is new capital, new money to be invested in projects that have a green focus. And green can be really broadly defined, right? Could be esg, it could be sustainability, could be renewable. It, it's fortunately, broadly defined. Um, and bonds are issued by countries, companies, uh, municipalities.

    and the post was about the last year only 30% of green bonds had a commitment to invest in green projects. So they essentially went from a hundred percent green bonds, investing in green projects to 30% green bonds, investing in green projects. [00:24:00] And that's cuz there's such a huge appetite for bonds, green bonds, and there's avoidance of risk on behalf of the bond issuer.

    So they'll say, okay, uh, we're gonna raise money for green projects, but we don't, we're not going to commit to doing any green projects. And it's this lack of transparency that is making greenwashing profitable. Right? There's so much demand. The bond market was down as a whole last year in issuances, but there were more green bonds issued year over year.

    Right. So that's where the appetite is. So they can sell you, you know, an apple when you asked for a cheeseburger because they're gonna buy any food right now and it doesn't matter if it's green or not green in the green bond world. And I was really like, uh, really frustrated and . I was like, what? I have to write about this as I bang it out on

    my

    keyboard,

    [00:24:57] Joe Gaspardone: the most eye-opening thing I've [00:25:00] post, I've seen in so long. I, I honestly couldn't believe it. I had to talk to you about it because, I like the, so for tho to simplify this, for some people, like 30% of the money raised for green projects is actually being used for green projects because the fine print in those bonds say we don't really have to do that, which is, I, I, I don't know how that, it just blows my mind that that can even be a thing that could happen.

    [00:25:28] James: So, so layman's question here, I I, is there a problem with having low, like, do we not have enough low risk green projects to invest in? Like, do we need more of those projects? Like, can this audience help de-risk and provide more projects for that audience?

    [00:25:49] Mandi Wedin: good question. So, th this was, um, my post was based on a, a paper, a research paper that was written by three professors. And so they asked the question in the paper of [00:26:00] why is this happening? Like, why, why is that acceptable? Why is the market buying this? And so that's one of the, um, proposals, is there are not enough green projects that can be funded by green bonds.

    Um, the answer is no. There's plenty of green projects,

    [00:26:18] James: Oh yeah. Oh yeah. Because I was gonna say, that's how you start. Everyone else in the

    audience slamming on their keyboards because everyone in this audience knows that

    there are

    plenty of projects out there.

    [00:26:27] Joe Gaspardone: It's totally bs. It's, it's, what it is, is a bunch of people who are used to spending money in the least risky way that have an opening to do that. So it's, is it less risky com relative to what? And if you have the back door open, you're always gonna go where the, the least risk is from your history.

    But if you've shut that door, there are zillions of projects to fund. It's, it's just, I, oh, I can't, I can't believe that that's possible. It's just so sad. It was [00:27:00] like, Mandy's post was like a fire hose feeding my cynicism that I don't want anymore of, and it was just like, no, this can't be.

    [00:27:09] James: be. So part of what I liked about this is you were saying why it won't be profitable for them to do that in the future. Can you talk about what door is gonna close for them here? Mandy?

    [00:27:21] Mandi Wedin: Yeah. I think it's the disclosure requirements and the regulatory framework that's coming, and that's coming on multiple fronts, right? It's, uh, it's at the s e C level for, um, any entities that are registered with the S E C are, there's gonna be more disclosure requirements. And the S E C's not telling you, uh, how to fix it or how to mitigate it, they're just saying, tell your investors what you're selling and then you're gonna be held accountable to selling that product.

    Right? And so, where there's no accountability today [00:28:00] or transparency today, there will be more in the future in the, the regulations coming out of other parts of the world, right? Asia and Europe. Are, they're in a different, um, place in the journey for disclosure in esg. And so they're more robust and in some cases more prescribed.

    So there'll be even more transparency demanded and reported.

    [00:28:22] James: Yeah. And, and one of the things that you were talking about in the prep session to this was how things are changing on the EU side of things. Can you talk about how more transparency is gonna be happening over on that side of the pond?

    [00:28:36] Mandi Wedin: Yes. So, um, I'm fortunate to be working on a project with a client who's launching a solar development fund, putting solar arrays on top of existing buildings as well as other, um, renewable energy projects. And they, uh, through that I've had the opportunity to learn a lot about the S F D [00:29:00] R disclosure framework, so it's EU Sustainable Financial Disclosure Regulation, and it's, here's what you're, Uh, much more prescribed about what you have to tell your investors your investment product is.

    So Article six is an investment product. That's one level of disclosure. Article eight is another level, and that's an investment product with e s G initiatives incorporated into it. And then Article nine goes to the next level, includes E S G plus a sustainability, uh, alignment, which essentially is do no harm to the climate.

    And the way that this is gonna feel different and is acting different is from an s FDR disclosure perspective. You have to make a pre contractual disclosure about here's what we're going to do in the ES and the G segments to be, you know, measuring carbon footprint to not, um, using [00:30:00] products or including your supply chain. Anything with forced labor to governance and attracting much more detailed, that's before you do it. That's your pre contractual, and then annually you'll say, here's what we did and how we did. And if you, if something comes up that's a red flag that needs to be disclosed, you will disclose that along the way, we didn't meet this target or this changed.

    And that is a very different standard than what we're experiencing in the US today around disclosures and setting goals and then

    accountability

    to meeting them.

    [00:30:37] Joe Gaspardone: I I really think James and Mandy, it's kind of the window into the future. Uh, I mean, we can see, we can look to that as, as sort of where we're headed on the journey and, and that will continue forward ahead of us. But it really is sort of a, a window in or a harbinger of things to come. And it needs to be like, this is just exactly the [00:31:00] process that we just talked about of codification standardization.

    Like, I need the things, I need those laid out so that I can meet them so that then I can connect the dots and say, here's how I'm meeting those things that are now officially things to, to, you know, raise my game to, to, to come up to. And that's critical because if it's, if it stays opaque, Then you're gonna have more green bond stories, , and nobody wants that.

    So that, that's the critical piece of the process as labor intensive and sort of, it takes a long time to get there, but, but it's, it's absolutely fundamental to the process.

    [00:31:45] James: Totally. And, and I'm just sitting here as I listen to you. Cause Joe, you brought up this similar point a couple times here on this episode. How many conversations about esg I've heard where now that you say that, I'm like, oh my God, it's so [00:32:00] obvious that we don't have that. And so a lot of the conversations are just kind of feeling around in the dark cuz we don't have this like process to point to with, you know, measurable

    results.

    Uh, to, and, and it's, it's sort of like what's coming to mind is like when we say zero carbon for example, well that's something that we can now sit here and say, oh, where, how much carbon are we? Like, where are we at on, on carbon? Because we set zero as the target. We don't necessarily have that for a lot of the other end goals that we we're talking about

    here.

    [00:32:37] Joe Gaspardone: Very much

    [00:32:38] James: so let's take this. We've set a nice little frame of reference context setting, you might call it. How is this sort of impacting smart building technology and the market for smart building technology? Who wants to start with that?

    [00:32:56] Mandi Wedin: So I wanna add one thing that's a layer to this, um, [00:33:00] question, and that is that there are so many, um, organizations that are selling me and my clients ESG solutions, which could be lots of different things because there are lots of different needs, but very few of them have their own e s G statements or goals or positions.

    [00:33:20] James: Totally.

    [00:33:21] Mandi Wedin: for my clients and I, that's a big red flag.

    If you don't do this, why should I buy

    what you're settling?

    [00:33:27] Joe Gaspardone: yes. I I swear this is like the golden thought here. It's it, and it goes, and tech, it's directly parallel to technology. Sh already are you eating your own dog food? That's what, how, what we've always said and, and that if you, I, I truly think, Hey, Mandy, you hit on, this is how you vet that solution provider.

    Can you show me your SG plan using your tools? I want, I would like to see that [00:34:00] in right there. Just show me that so I can understand how these tools work and how you're using it to achieve those. And if you can't do. Then that's, that, that gets kicked to the curb because that is the kind of fundamental vetting tool, um, that you, you where you can really say, are these people, at least they have something, you know, I can see it.

    But if they're, if they're not able to even produce that, I don't, I agree. I think it's very squishy. After that.

    [00:34:29] Mandi Wedin: Yeah,

    [00:34:30] James: so if I'm,

    [00:34:31] Mandi Wedin: of learning.

    [00:34:32] James: if I'm like a, let's say I'm a solution provider. We've been talking a lot about vital roles recently. I'm, uh, msi, right? And I'm an MSI hearing this and I sell software products and I sell projects. How can I sort of, and, and, and my marketing and sales people are using ESG to sell those software products and solutions, right?

    How can I make it so that when I go to a building owner, I [00:35:00] am eating my own dog food? How can I do

    that?

    [00:35:03] Joe Gaspardone: Show me. Let's go back to Missouri. I'm, I'm in the, I'm in the state of Missouri. The show me state, show me your plan. That would be a great

    [00:35:12] James: Okay.

    [00:35:13] Joe Gaspardone: Um, on the MSI side, on the technology side, show me your office. Can you, do you have that mythical single pane of glass where you can see everything that's happening in that office? Have you outfitted your office with occupancy sensing that is controlling various aspects of heating, cooling, lighting, you know, have you put the. An investment to show to your own space That is translatable to me that as a, when I'm putting on my ops hat as a potential customer, that's gonna tell me a lot, maybe, maybe more than your reference clients who are gonna say nice things.

    [00:35:53] James: Totally.

    [00:35:54] Mandi Wedin: it, you can, you can go, you can look at, um, your. [00:36:00] biggest investor, your biggest client. And what does their e s G report say? What are their values? What are their targets? And what are, what are we doing already or what can we do to make that journey? Right? Do we measure our carbon footprint? Do we make decisions that helps reduce our carbon footprint, right?

    Do we, um, have a d E I program? Do we even use those words? Do we talk about diverse team members? Do we have diverse team members? Do we value diverse, uh, thoughts in the workplace? You can talk about the supply chain and what you recommend, what your products are. Do you confirm that they're not made with the use of human, uh, forced labor, right?

    Like there, there's different things that are regularly high ticket items on an broad scale ESG plan that you can understand how you can play in. , uh, into that value chain, the big, broad value chain to meet those goals, [00:37:00] to support the goals of your clients, right? Because again, don't, don't embarrass your clients by installing a product that it turns out was made by young, uh, underage children in a different part of the world, right?

    That hurts on so many different levels, but it's really an embarrassing moment for your client and an embarrassing moment for yourself.

    [00:37:20] James: and you can say that same thing about the embodied carbon of that device, or you know what, whatever other metric that they have a, a goal around. Totally. All right. What other, what other ways are esgr market conditions, trends impacting this smart building marketplace?

    [00:37:39] Joe Gaspardone: Well, I mean, I, I, the, the truth is, and I, this is gonna get into the broader topic, but without going too deep yet into that, um, there's, there is a, you know, we're going to, this is gonna be a struggle, not for every single asset and every single vertical, but, [00:38:00] but as a whole, the c. Is going to get pinched financially for a long time, a lot longer.

    People have been very polite about it. Probably Mandy and I were too polite the first time given our backgrounds, but this is, this is, you know, right now it's a five year problem that it, it takes very long to recover in real estate. It's not like the macroeconomic economy. So we are going to see financial struggles and the master struggle for technology and ESG is going to be, can we continue to develop the standards and sell the products enough to support the clients at a time when they can least afford it?

    And it, it's going to, there's gonna, there's gonna be a lot of distress in the market because of.

    [00:38:54] Mandi Wedin: Yeah. I also think it's, it's, it's changing. So we, we [00:39:00] went, we've gone from mostly a desktop exercise for E S G certifications, reporting policies and procedures, contractual updates. As much of that is, could be done. And that's important cuz it's laying the foundation for what's next. and what's next is taking it into the building and changing human behavior.

    And that's hard, right? We talk about that in many instances and within the Nexus community. And it, it takes time and money and commitment. And as Joe noted, we don't have a lot of time. We have a lot less money this year than we did the beginning of the year last year. And our commitment, uh, maybe is the same, but our ability to execute has potentially changed.

    And as we're seeing with some headlines, maybe our commitment is changing too. So making progress, um, deploying technology, deploying, [00:40:00] um, solutions that will meet these ultimate e s G goals. Remembering e that s g is about getting better results through better managing risk and better deploying resources.

    it's harder today and it's only gonna get harder while the real estate market is in complete flux.

    [00:40:20] James: Well, let's go ahead and just talk about where the market is and then maybe we could circle back to, once we talk about the market, we can circle back, back to smart buildings. So let, Joe, let's go to you, like, let's just do this, you know, sort of macro market update. What, what's happening right now? We've talked about a lot less money.

    What? What do you

    mean by that?

    What's going on? And it could be

    [00:40:42] Joe Gaspardone: Oh boy.

    [00:40:42] James: last time

    we

    talked about

    this as well.

    [00:40:44] Joe Gaspardone: If, if the, if my last statement was a bucket of cold water, this is gonna be a water tower of cold water. Um, but, but look, we, you have to, you have to acknowledge where we are and this is where we are. Okay. Just, just, just take these five points [00:41:00] in. Interest rates are double what they were 18 months ago. Vacancy is double what it was 18 months ago. Rents are substantially lower, like way down for B and C class properties. Kind of a pretty, pretty much treading water at the A class. But the A class is very small, so B and C properties are down. You know, vacancy rates are, are, are double, triple what they were.

    And um, there's a reduced demand for space. That's number four. So you've got the same tenants taking 15, 30 ish percent less space than they were and probably the least often forgotten aspect is on the expense side of the model. Expenses have risen. 11% is the kind of average you hear floating around.

    That's a huge increase in expenses. So you have a [00:42:00] quintuple whammy. I double whammies. I've seen triple whammies. This is like five. All converging on the market at once. And is multifamily trailing doing better? Yes, but it's, it's just, it's trailing and it's moving in the same direction as, say, office space, which is the hardest hit.

    Life sciences is going earth and just like coming to a, to a, to a hard stop and probably gonna go that direction as well. So the truth is, commercial real estate is a hundred percent in a recession. The economy as a whole is not commercial real estate, and especially office is 100% there. But it's at the, you know, it's like the train that's going down the hill and it's just coming down, but you know where, where it's going and there's no more track down there.

    And you can see a wheel wobbling. But unless Superman [00:43:00] comes along, it's happening. So, you know, the smart companies are gonna figure out where the money needs to be spent and get there to meet the market and continue to survive or excel in a very difficult market. And so that is e s g tools have to be done.

    There are, there are certain things that just have to happen irrespective of tight budgets and certain core technologies have to be done for local law 97 in New York for other markets that absolutely have to meet certain benchmarks and energy star compliance and things like that. So there are opportunities in there, but the truth is there's gonna be a lot of distress, both asset distress and company distress, uh, solution provider distress over the next.

    And it truly, I mean, if you aren't looking at at least five years, then, [00:44:00] um, you, you haven't been around long enough because this, these cycles are long and I've, I'm sorry to have to say, but it's the ab absolute truth. Unless, you know, by some miracle something changes that just breathe life in, in a very, very quick way, it's just gonna happen. And that, and that has never happened before. That has never happened. There's no, you know, the, the Fed doesn't just drop interest rates back to zero . So it's, it's, it's gonna be a while.

    [00:44:32] Mandi Wedin: it really we're sitting in the moment of peak uncertainty, right? All that is happening while, um, we're waiting. We broad, we macro as well as the real estate industry is waiting to see at what point interest rates will stabilize from the fed's perspective and then start to come down, right? So when, when that moment happens, and it'll take a couple months for there to be some trust or expectation [00:45:00] that it's now a trend and not just a blip, then you'll see activity resume and you'll see transaction, more transaction volume happen.

    But we're in the moment of peak uncertainty because interest rates are high and no. Clear indicator of when they'll drop. The way we've used real estate, particularly office has changed, and we don't know where that's going yet. And we're, uh, the broad economy is anticipating a recession, so we're everybody's planning for and bunkering not just real estate, which yes, I agree with Joe.

    With the second interest rate hike. Back in the spring, real estate went into a recession as defined by zero growth or negative growth in transactions, right? Those three are big pressures, and we are waiting through them and the, the market is paused, still paused as a kind word, frozen dead. If you're trying to sell a mediocre asset [00:46:00] because your lender is telling you you must sell because you've tripped a covenant,

    [00:46:03] Joe Gaspardone: and,

    [00:46:05] Mandi Wedin: a tough

    [00:46:05] Joe Gaspardone: and and where are we? I mean, in every major metro market now, buildings have just been handed back keys back to the, to the lender. Um, that, that big, big buildings in every major mar market. And there's a lot of analysis occurring now in these large companies to determine which ones to hand back and they're gonna, so there's gonna be another, it's sort of like a trickle that's getting gonna hopefully stop at a small flow, but it's going, those things are going to happen over the next 12 months.

    And those pressures, those five pressures that I talked about are, some of them can go away with stability, but then you're still sitting at a lower asset value, significant. 20 to 35% is a very good range right now from, from the highs that, that, that, you know, when you talk about a third of an asset [00:47:00] value being knocked off, that's, that's, you know, all that's as bad as we've ever seen, put it that way.

    So yes, people are very good now. They're planning and they're, it's happening in a way that is healthier. So to hopefully mitigate some of that, that has also not really happened before. There's been a very good, very good job. Dead to equity is much better and a lot of the fundamentals are better. So that's gonna help.

    But the truth is, when you're staring down, just having lost, you know, an a hundred million building, 30 million of it, that the pressures are, I mean, budgets are gonna be as tight as you've ever seen. So that's where I talk about getting back to the core solutions. That's, that's gonna be really critical.

    [00:47:49] James: Okay, cool. So now with that context, we have the ESG happening, we have general market conditions happening. Now let's kind of talk [00:48:00] about what are the best strategies for the technology marketplace to sort of adopt right now.

    [00:48:06] Mandi Wedin: So I would say one piece that, um, is in is informing and influencing the adep, the adoption or the investment into technology is you have another decision maker at the table for a lot of these projects, and that's the lender. They probably. Two years ago didn't have to be at the table cuz the loan was performing and the asset was performing.

    But now the stat I read the other day is 60% of the office buildings are economically owned by the lender, which means they're, um, scrutinizing expenditures. They're not, uh, saying yes or no, they're just looking very closely. And as the owners are trying to work, the borrowers are trying to work their way through it.

    So if you're gonna make a big investment, there needs to be a very sound reason and [00:49:00] there always has been. But now there needs to be a sound reason that, um, it makes sense for cash flow to come out of that asset. And so it's another layer of decision making process. It's another, um, challenge of time and, uh, information and it's super opaque as the So solutions provider, you don't.

    You're not talking to the lender at the table, right? Someone else is probably, you know, three games of telephone away. But that, um, is part of the process today. And there's, there's also a difference between why is, why is this difference from today different than the gfc the great financial crisis? And a couple things come to mind.

    One is lenders didn't take buildings back as quickly then because they saw a way forward for where the building would be when the uncertainty abated and there was more clarity. And they wanted that to continue to be in the hands of the operator. The expert [00:50:00] today, they don't have that clarity of where that office building will be in function.

    So they don't, they wanna have control, right? So they'll take it back. And the second is just where the leverage levels were going into the GFC and where they are today as the value drop. There's potentially, if there's still money on the table and the value of that building, the lender wants to take it.

    And mo there were more, um, multi-family assets that went into default under their loans than office in the last report, right? So it's not just office buildings, right? It's broader. But when you think about deploying technology and you think about the solutions and how you're gonna win, um, win the sale, win the execution, it's really important that you know the pressures of the owner.

    And you hear me say this all the time, like, what's important to them and why should you care? Because that's the only way you're [00:51:00] gonna get

    that

    contract signed.

    [00:51:02] Joe Gaspardone: know your customer, speak their language. If you can do that, then you will understand all of the hurdles they have sitting behind that, and that that would go to my one piece of advice. It's one word core, and it's, what does that mean? It's. your solution needs to be core to what the building needs in a tough environment.

    Your relationships, your core relationships are the ones that are gonna get you through the tough time. Focusing on those, you know, and not scale is going to be critical if you wanna get through and make progress and working through your core relationships. In real estate, commercial real estate in particular, it is such a small number of people under this very broad hood of assets.

    Those, those core relationships are critical [00:52:00] as you try to get through and, and, and, and grow, um, during this tough time. And then the other thing is, James, it comes back to your marketing fluff. You have to deliver exactly. what you say you're going to deliver. You can't have, you cannot have one single thread of marketing fluff in your delivery in this market for the next, I'm gonna say five years.

    You can't because it will get sussed out. It will get exposed when you can't do something that you represented and you, you, you will not survive the five years that is, that's like a third rail now, um, if it weren't before, it's always been, uh, it's been, been the advice given, but now it's truly a third rail.

    And if you cannot deliver that thing you're saying you can, that's going to you, you won't, you won't make, you won't make [00:53:00] it through the.

    [00:53:00] James: So I want to kind of pull back in something from the last episode, which we talked about. What are you delivering? And I think last time we talked about we're delivering a, uh, repositioning of assets sometimes. So when the assets are changing ownership right now, which it seems like they are, is that a piece where people could look at that and say, that's an opportunity for us still?

    Is that one of the strategies that applies?

    [00:53:28] Mandi Wedin: definitely. Right? And that, that's cuz there's a transaction and there's dollars available, right? And if you're gonna keep the asset, right, you've got the investor, the owner's gone through a wholesale decision and they're keeping it so they're reinvesting in it. So what are they investing to meet their reposition

    [00:53:47] James: how are they repositioning? Yeah,

    [00:53:49] Mandi Wedin: Yes. And that could be we have a net zero carbon target. We need to start the plan today. And that means reduce, reuse, and recycle, right? So [00:54:00] what's the reduction piece of it? And then what's our capital investment into it? So that understanding that that's a framework is a great place to meet

    [00:54:10] James: I feel like that's huge.

    [00:54:11] Joe Gaspardone: Yeah, well, the C and b prop, the majority of the market B and C class properties, they fundamentally have to undergo that transition to survive even after being taken back by the lender. So there will be that. That's the good news, is af through this painful cycle, the recapitalization at a lower value open, that that lower value opens up new funds to come in to make that transition happen.

    So that is the opportunity. in the process to come in and help make that transition. That's gonna become a big piece of this business going forward. And, and that, you know, if the, to the extent you can get in and be seen and visible [00:55:00] there and deliver that, that it's a complicated process, very complex to take a B or C class property and move that up the chain for, for real.

    And so it's not redoing the lobby anymore, it's fundamental technology and ESG commitment driven move up from a C to a B or a B to a b plus or an A, an a so that those are expensive, but the money will be there cuz they, they, they, it's

    [00:55:30] James: And that's where I've been trying to, on the ESG panels I've been sitting on, I've been trying to communicate that to the people that maybe sat there five years ago and said, our value proposition is energy savings. And if an asset is being repositioned for ESG or for decarbonization, your asset or your, your value proposition is energy savings and right.

    You, you need to start to think about how you fit into this repositioning process. [00:56:00] Um, I wanted to get, we're, we're kind of running outta time here. I wanted to get to one last question for you guys, and we talked about. Last week. I think this will be last week by the time this comes out. But, um, Joe Amador and Gene Casey and I talked about this.

    It was this tweet thread that we'll put in the show notes and the tweet, the, the original tweet said, PropTech startups. And this is super related PropTech startups that charge per unit recurring SAS fees and promise, either amorphous process efficiency improvements or worse, I'm using air quotes here, data driven operating insights, which is everyone are going to have an incredibly hard time generating new business in 2023.

    Can you guys unpack that and unpack that from the lens of, if I'm one of those vendors and I go to my own website and it says Data driven operating insights, how should I be like thinking about my life right now?

    [00:56:53] Joe Gaspardone: Chat bot rewrite.

    [00:56:59] Mandi Wedin: [00:57:00] Okay. So I would say that, um, the data driven operational insights are the means to the end, which is better performance and better results. You can talk about insights and you can talk about data being valuable, but you'll have to get to the action piece and the results piece of it, and if you, so my perspective is if you can produce actions and produce improved performance and results, if you choose to charge per unit or percentage or per square foot, the landlord will probably pay for it if the math works for them, right?

    But if you're charging, um, a dollar per unit and you're just gonna get more data just then you've only gotten half of the picture. For the full cost. So they want the entire picture for the entire cost. And so you're, you're only

    [00:58:00] halfway

    there.

    [00:58:00] Joe Gaspardone: this, this comes back to the the problem that it's, it's directly connected, which is I've got a dashboard for my sensors and a dashboard for my HVAC and a dashboard for my lighting control and a dashboard for my, and, and that will not, and before people could tinker in that world and see, well, what does that really do?

    And what insights do I get that I can act on? And there was room to test and to, to, to explore a little bit in this universe. But now I have even less dollars, fewer resources. My smart building team just got axed. My, you know, two of my enter, my five enterprise architects are gone. Like, I need you to. quantifiably. Show me how to, these, some of these things are gonna be brought together an usable way that will drive my [00:59:00] expenses down. When you can do that, you're in, I you got my interest because I, I can still make the case for that. If you're sitting on the periphery out here, I cannot have my engineer going to three different places to look at something and then go over here to see what if it's real.

    And it's just, it's not, it's not on the table now. And so that, that's how I would sort of frame it.

    [00:59:25] James: Love it. I think that's a good way to, to close off this, this version of our, our ongoing series. Let's end with carve outs. So what, what book, TV show, podcast, movie, documentary, insert your media choice, media of choice here, uh, has had a major impact on you lately. Let's start with you, Mandy.

    [00:59:47] Mandi Wedin: Sure. So I have two for you. One is, um, chat, G P T. I've posted about this recently. The, um, bias in our data, right? Algorithmic bias [01:00:00] in our data and what that means to. Society to our industry, to investments. It's far reaching and chat. G p t is the, the phrase, the current use now. So testing that out and being like, Hmm, okay, this writes like my talented sixth grader.

    Awesome. I ask for a compare and contrast for information. Okay. That also sounds like my talented sixth grader. Great. I I'm not at risk of losing my consulting clients right now, maybe in five years. Right. But the answers that it gives and the data sets that it pulls from, what are those? And if we use only the past, we're gonna build essentially our future that looks exactly like the past.

    And for some of us on Earth, it hasn't been that great. So how can we do it better? Cause we're, I've been spending a lot of time reading and

    [01:00:50] James: absolutely. I feel the same way.

    [01:00:54] Mandi Wedin: go

    [01:00:54] James: gonna say real quick, I, I feel the same way about the time I've spent on Jet Chat Chat, G p [01:01:00] t asking it about smart buildings topics. I feel like the answer it gives is very rooted in how things were or how, you know, they were five years ago, 10 years ago. It, it, it doesn't really provide a perspective on where we should go or how we

    should get

    there. And if you go to the Nexus Slabs website, nothing on that site was written by a chat G P t

    [01:01:24] Joe Gaspardone: fair? I, I would, I would add cha. Um, here's the, uh, here's what, uh, if your solutions provider company, so say just lighting your lighting control. Go to chat g b t and say, explain the top five reasons a building should deploy lighting control to a, in to a five-year-old, you know, play with the terms, but basically say, here's my solution and explain the top five reasons, uh, to a five-year-old.

    What, [01:02:00] what you will get is shockingly helpful. For building staff and I does not to cast aspersions on the building staff, it's just broken down in a way that is like what would've taken years of marketing wordsmithing, um, in a way that you can take slightly change and actually probably explain better to a non-technical audience your solution.

    It it, it was, it was shocking to see like the top 10 reasons for a smart building explained to a five year old. It's unbelievable. It's like, oh my God, that's actually going to be translatable to people who really don't understand all of the nuance and all of the technical stuff.

    [01:02:47] James: Totally. Okay. Sorry Mandy, we interrupted you. you.

    had another one.

    [01:02:51] Mandi Wedin: Oh, my second one is I'm reading dinners with Ruth by Nina Totenberg. Nina Totenberg is a NPR Supreme Court [01:03:00] correspondent, and so I'm enjoying the connections to DC and R B G and uh, and I listen to Nina on the radio on a regular basis too.

    [01:03:08] James: Awesome.

    Joe, how

    about you?

    [01:03:12] Joe Gaspardone: Well just dawn on me because you, you mentioned in the last few podcasts, um, the movie contact and everything everywhere, all at once. And, um, in fact, everything everywhere, all at once could actually explain the challenges in commercial real estate. Right now, , it's, it's literally,

    [01:03:29] James: a great

    [01:03:30] Joe Gaspardone: it's everything everywhere, all at once.

    But, um, thi this book series, the first book is called Hyperion, and if you are a fan of contact, It was written, it won the Hugo Award. Many, many awards. But, um, if you're a fan of contact and everything everywhere at all at once, Hyperion is the one of the most well-written books I've ever read. One of the deepest, deep, deep, deep themes [01:04:00] and layers of, um, of just well-crafted writing at weaves somehow in a science fiction book, poetry from Keith's into the mix.

    It's in, it's an, honestly, as you hear it or read it, you will say, I can't believe this genius, like even the highest level genius would struggle to write this ma, these, it's four books, these masterpieces. They're, they're, uh, I learned so much and I got so much out of them philosophically. It's just very, very deep. Hyperion. Start with Hyperion.

    [01:04:37] James: Love it. And that's the first of

    four.

    [01:04:39] Joe Gaspardone: Yep. you will, if you, if you like that, you'll, you'll be locked in for all four. They're, they're, they really are masterworks in

    literature. Yes.

    [01:04:51] James: share mine before we, we, we end this. Um, so the, the third season of Ted Lasso is coming out, uh, in a couple weeks. I would, [01:05:00] if, if anyone hasn't caught up on season one, two, it's just a great, it's just a great show. You don't have to be a soccer fan. Has nothing to do with soccer, really. It's more about being a human.

    Um, so we resubscribe to Apple Plus to get ready for that. But on Apple Plus there's a show called Shrinking. It's Jason Siegel and Harrison Ford. And Jessica Williams. And I'm like, four episodes into it, my wife like pulled, I was like, I don't want another show. And then she like pulled it in me into it and it's just so good.

    Anyone that's been through therapy before would will just like, love the lightheartedness around the therapy process. It's so good. Highly, highly recommended. If you like Jason Siegel, you'll love this. Uh, and, and Jessica Williams is just a amazing, amazing person to, to watch, so

    [01:05:48] Mandi Wedin: I agree. I, I laugh out loud at one of the episodes

    [01:05:52] James: Oh yeah,

    [01:05:52] Mandi Wedin: like, Adam, uh, that my whole family is like, what? I'm like, hush. I'm watching.

    It's funny.

    [01:05:57] James: yeah.

    [01:05:58] Joe Gaspardone: wait. I'm in [01:06:00]

    [01:06:00] James: You're in. Love it. Um, cool. Well thank you for this. You too. I think this will be super insightful for a lot of different stakeholders in the audience and we'll catch you next time. I hope we have a less bleak market outlook in the next quarter.

    [01:06:15] Joe Gaspardone: Me too.

    [01:06:18] Mandi Wedin: We tell it like it

    is James,

    [01:06:20] Joe Gaspardone: That you gotta

    [01:06:20] James: That's fair.

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    "So many organizations are selling ESG solutions, but very few have their own ESG statements, goals, or positions. If you don't want it, why would I?"

    —Mandi Wedin

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

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

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

    Episode 141 is a conversation with Mandi Wedin of Feroce Real Estate Advisors and Joe Gaspardone of Montgomery Technologies.

    Summary

    This is the second edition of the CRE Market Talks. In this episode, we talked about what the CRE market is up to right now and how that relates to and affects the implementation and deployment of smart building technology.

    Without further ado, please enjoy the Nexus podcast with Mandi Wedin and Joe Gaspardone.

    Mentions and Links

    1. Montgomery Technologies (1:21)
    2. Feroce Real Estate Advisors (2:07)
    3. 🎧 #138: Rosy Khalife (4:16)
    4. 🎧 #135: Cliff Majersik (8:39)
    5. 🎧 #071: DEI Today in the Smart Buildings Industry (12:23)
    6. 🎧 #139: Joe Aamidor and Jeanne Casey (56:10)
    7. Twitter thread (56:13)
    8. Dinners with Ruth by Nina Totenberg (1:02:55)
    9. Hyperion by Dan Simmons (1:03:38)
    10. Ted Lasso (1:04:57)
    11. Shrinking (1:05:16)

    You can find Mandi and Joe on LinkedIn.

    Enjoy!

    Highlights

  • Joe's introduction (1:05)
  • Mandi's introduction (2:01)
  • ESG+R and why we care (4:21)
  • How DEI fits into ESG+R (12:26)
  • Greenwashing from the investor's perspective (17:01)
  • Green bonds (22:15)
  • More transparency in the EU (28:23)
  • How ESG+R pressures are impacting the smart building market (32:38)
  • Macro market update (40:21)
  • The best strategies for the technology marketplace right now (47:51)
  • Carveouts (59:33)

  • 👋 That's all for this week. See you next Thursday!

    Whenever you're ready, there are 4 ways Nexus Labs can help you:

    1. Take our shortcut to learning the Smart Buildings industry here (300 students and counting)

    2. Join our community of smart buildings nerds and gamechangers here (nearly 500 members and counting)

    3. (NEW) Join the Nexus Labs Syndicate on Angellist for opportunities to invest in the best smart buildings startups that cross my desk each month.

    4. (NEW) Our Partner Hub is launching soon. This is an opportunity to be featured on our website, get original content, and tap into the Nexus community. Visit our partner page. Email us at partners@nexuslabs.online


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

    Full transcript

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

    [00:00:31] James: Hello and welcome to the Nexus podcast. This is another edition of the C R E Market talks. I think this is our second version of this quarterly podcast series. I have Joe Gasper and Mandy Whedon here. Um, we're gonna talk about today, you know, first of all what the CRE market is up to right now, and how that relates to and affects the implementation and deployment of smart building technology.

    We're gonna use ES [00:01:00] g R to set the context a little bit. Um, first, let's do some intros. For those of you that haven't met Joe and Mandy, both of them have been on the podcast individually as guests. And then again, this is the second time we've done this with the three of us together. Joe, why don't you go first and introduce

    yourself.

    [00:01:19] Joe Gaspardone: got it. Joe Gasper, COO of Montgomery Technologies. Montgomery's a. Uh, infrastructure primarily, uh, provider to commercial real estate converged networks, which is happily now a term that's more widely understood and known. Um, and we've been, been doing that for 20 years. Um, I also have a close to two decade, uh, career in commercial real estate.

    Before that, that is all about almost every role in commercial real estate operations at one point or another. So, um, so we're gonna leverage that on the market talk.

    [00:01:56] James: All right, over to you, Mandy.[00:02:00]

    [00:02:00] Mandi Wedin: Awesome. Nice to see you both. Hello, my name is Mandy Whedon. I am the founder and CEO of Furs Real Estate Advisors, where we advise forward, think. Companies to position their portfolios, their buildings, and their teams to succeed during times of disruption. Over the course of my 20 plus year running 20 plus year career, running multi-billion dollar portfolios, I built and led high performing investment management and diverse investment management teams.

    And today at Ferro, we work at the intersection with our clients where we can create value out of the commercial real estate industry's, uh, collision with technology. Collision. With E S G R, I had the R for resilience and consumer demographics changing consumer demographics. Glad to be here for number two.

    I'm glad We

    made

    it, Joe. We

    made it through the first one

    [00:02:55] Joe Gaspardone: Yeah, you never know. That first one is a high bar. Could get the [00:03:00] ax

    [00:03:00] James: Yeah, you didn't get ax. We're back again. Uh, yeah. No, we got great feedback on the first one, I think. You guys both are super involved in obviously the implementation of technology, but you also have that lens about how real estate markets and real estate investors and real estate owners actually think.

    And I think that sort of intersection of things I'm playing the sort of one that is still learning, that's my role here. Uh, that side of the, the, the way to think about smart building technology. And I should say thank you to you both. You, you both have been super involved in Nexus Pro and Nexus Foundations and sort of helping me bring that perspective to, you know, obviously the events that we do, you both have taught SME workshops on your different expertises.

    Uh, so

    thank you.

    [00:03:49] Mandi Wedin: You're welcome.

    [00:03:50] Joe Gaspardone: You're, you're the one guy moving this world forward in a way that is different from the past, and I think both Mandy and I [00:04:00] appreciate that Nexus is trying to do it right and do it differently and, and it's working.

    [00:04:07] James: thank you. Trying to, and, and no longer one guy anymore either. Uh, Rosie is here now. Uh, those of you that haven't met Rosie yet can check out the podcast we did together a couple weeks ago. Um, let's jump in. So let's start with E S G R and, and Mandy, this is an area where you and I talked about this on the podcast like a year and a half ago, something like that.

    Right. And I'd say that it was hyped up then, and it's even more hyped up now. I think what's been interesting lately is when you look at the headlines, there's like a political, uh, commentary happening around it as well. I don't know that it was happening as much back then, but it seems like there's been, uh, some pushback.

    Can you just kind of describe what's going on with the headlines and all the press and attention that E S G R is getting right now?

    [00:04:58] Mandi Wedin: Sure. [00:05:00] Yep. So I will say that, um, yes, there are a lot of headlines, but regardless of what the newspapers and media's saying, E S G R is here to say the horses left the barn. So we have to figure out how to engage with it to get the best results. And, uh, it's a, it's a tool, it's a acronym that's being used to serve different purposes.

    And so it's possible that we won't call it E S G in two years. Right. We'll have, uh, evolved and used a different word. I don't know what it is. You can, you can patent or trademark the one you think that's gonna win, but,

    [00:05:35] James: Please

    [00:05:36] Mandi Wedin: it potentially could be something different, but I think it's important to level set what it is.

    Right. And many of you who have heard me talk about this before, it hasn't. What it is, hasn't changed. Right. At the base of it, it is a comprehensive approach that investors use. To evaluate investment decisions through a [00:06:00] framework, an E S G R framework, to achieve both strong risk adjusted returns and positive societal impact.

    You need both, and you need both to, to both meet the needs today without compromising the future. And the four pillars are interconnected. Environmental right steward of nature. Social criteria evaluates how you manage relationships, community, customers governance deals with your leadership and your executive pay, and your oversight and shareholder rights and resilience is how businesses, properties, investments are prepared to manage through risk adverse events, as well as capitalize on opportunities. And at the core, it hasn't changed. It's about creating long-term value, the managing risk, building resiliency, and providing transparency and accountability. It's, it's, our conversation is different now because it has, um, [00:07:00] made headlines and been used as a tool, but the investors, lenders, employees, tenants, and regulators are still demanding it, and that pressure is only increased, right?

    We can talk about it as hype or we can talk about it as pressure. It's only increased, and I give two numbers when I talk about it from a carrot and a stick perspective. One is 121 trillion US dollars, and that represents the owners and investors who are signatories to the N P R I, the United Nations Principles for Responsible Investment, 121 trillion signed a public commitment to integrate ESG into their investment and ownership decisions.

    That's a huge number that's grown significantly in the last two years.

    [00:07:49] James: And that's assets under management of all of the signatories.

    [00:07:53] Mandi Wedin: Mm-hmm. And then 48% is my other number. This is the stick side of it that's [00:08:00] regulation around decarbonization at the local jurisdiction level. And then disclosure, um, requirements, most notably the SEC's ruling that'll come in April, but 48% of the buildings that were, that received a grade under New York City's local law 97 last year received a D or an F. That's a really hard score to have when you're trying to go and sell your building or refinance it or negotiate a renewal with your tenant. So that's a big stick regardless of your disclosure requirements.

    [00:08:36] James: Right, right. And we've talked about mandatory laws and other podcasts most recently with Cliff Majek, talking about all the different ways in which these regulations come into play. Um, can we talk about, okay, these targets have been set 121 trillion, Can we talk about how that trickles down into how does this meet the, you know, hit the operations?

    How does this [00:09:00] hit an individual building?

    [00:09:02] Joe Gaspardone: that's, that's, that's really where, you know, the rubber meets the road and it's, it's a tall, tall task right now because everybody kind of understands the E or when you talk about D E I, they understand the D diversity and there are metrics you can quantify energy and diversity. But then when you get to the SG and the EI of those two acronym.

    you're in a, uh, a much more, um, opaque world today. That's not to say that it won't iron itself out over time, but it really is difficult to say, how am I progressing? Are there standards, are there metrics? Are there quantifiable ways I can show this? As opposed to writing a 20 page narrative about what we're doing?

    And so that's still a lot. That's the area that's still under development, and [00:10:00] that is quite frankly, a struggle for, uh, a lot of people. You've got lenders, you know, you've got the money that's committing to these goals. You've got occupiers and tenants that are committing to these. At that level, you've.

    Individual management companies that are committing and ownership, that's committing. So everybody's making, you know, putting their flag in the sand. But how do you, how do you then show that in a somewhat standardized way? And that's, that's sort of where we are today, is, is working through the struggle of showing that progress in a way that everybody agrees is, is, is a standard

    [00:10:42] Mandi Wedin: I agree.

    [00:10:43] James: and what I've seen recently, sorry, what we see, I think annual, we see these annual reports, right? You see an annual report from uh, uh, and it's kind of like the person writing that report decided what [00:11:00] was gonna be reported and what numbers we're gonna be reported, and whether that number's good or not, and whether that progress is being celebrated.

    And it, yeah, it's right now it's like everyone's trying to feel out what's good and then it seems like what's good is also the, it's also ratcheting up. The expectations are ratcheting up over time. Each year is like, well, what was good in 2019 is probably not good right now. And so that's, that's making it more difficult to sort of wade through what it means to be successful in this area.

    [00:11:31] Joe Gaspardone: Totally. I I think part of that struggle too is, um, you, you, it's very much like a smart building, right? Um, what was smart in 2019 would not necessarily be the same standard today. And it's, you can apply the, where we are with esg, the same as technology in that these are works in progress and they're wor, they're really happening in parallel, but, but very much along [00:12:00] the same kind of timeline with the same learning curves, development curves.

    So I just think that, you know, there's, there's no shying away from it. That's where we are. But the good news is all parties are sort of committing to it and around it. And so that bodes well for the future. It's just gonna be a little bit bumpy for a while. yeah,

    [00:12:20] James: yeah, a hundred percent. So, Manny, Joe mentioned d e i. You do a lot of work in, in this area. We've had our, our own. , uh, webinar and podcast on this, conversa on that conversation, can you talk about kind of how d e I fits into the E S G R conversation?

    [00:12:38] Mandi Wedin: Sure. Yeah. So from, uh, an investor's perspective or a risk analysis perspective, d e i is one of the pieces of the robust E S G R strategy. And it can be housed under the S pillar or under the G pillar. And it's also in R right, cuz it's, they're all interconnected. And if you [00:13:00] have a access to, um, a broad-based talent pool and you have, um, a strong program where you grow and retain your employees and your talent, your organization is better equipped to respond to exogenous shocks and it, you can perform better.

    And you've heard me say this, we use a lot of tech to underwrite our investments, but at the end of the day, the investment decision is made by a human. And we want a better informed decision. We have more inputs, more viewpoints, more lived experiences. We can make a better decision to get better results.

    And when we widen our field division, we bring more people, more viewpoints, more perspectives to the table. We see more opportunities and we see more risks, and we see more ways forward. And to Joe's point, right, diversity, equity, inclusion, belonging, those are all words that we use today to talk about widening that field of vision and [00:14:00] the population, the workforce is changing drastically.

    This is a point that some organizations are feeling today, and some will feel tomorrow, but there will be, and there are actually on the Gen Z side, there are 300,000 fewer people who are turning 18 each year compared to 10 years ago. So there's a smaller incoming cohort. We're producing fewer workers defined as an 18 year old, and then on the other end of the spectrum, by the end of this decade, by 2030, all of the baby boomers.

    Will have turned 65 or older. So that's the sh retiring piece. That's the shrinking other end of the spectrum. So what's in the middle, right? That's the workforce that you have in the middle. That's also probably your user and creator of your real estate or your technology. And that, um, is where the talent war lies today. And if you don't have a [00:15:00] business practice that can manage that risk well then you're at a disadvantage.

    [00:15:07] Joe Gaspardone: And I think that's a looming crisis almost that, um, as Mandy said, some people are seeing and feeling. , but the numbers don't lie. I mean, the age out that's going to occur on the, on the high end is real, gonna be extremely hard to replace. If you looked at it today, based on the resources and development of new people coming in and skills, skill sets coming in, it's a massive lift that is, has been chronically kind of under-resourced over time.

    So, so that, that is another challenge. It's, it's going to be very, very hard to replace, um, the, the skill sets and the personnel across commercial, commercial real estate operations. [00:16:00] And, um, you know, maybe, maybe robots will take some piece of that, but I don't think enough,

    [00:16:06] James: Yeah,

    [00:16:07] Joe Gaspardone: that will not take it either.

    [00:16:10] Mandi Wedin: no , not our, it's not the, uh, golden solution. But I mean, think about it from a real estate investment perspective, right? Fewer 18 year olds means there'll be fewer household formations happening in. Decade. Right? And household formation is a hugely important metric that we follow for residential, both, um, to own and to rent.

    So understanding who your renter is, who your customer is, uh, is important, and how many of them are there, and where do they choose to work, and how do they choose to work? All important to your underlying investment criteria.

    [00:16:46] Joe Gaspardone: Yep.

    [00:16:47] James: Totally. Um, anything else on that topic before we move on?

    [00:16:54] Mandi Wedin: So much more. But let's move on.

    [00:16:56] Joe Gaspardone: There's always more.

    [00:16:58] James: [00:17:00] I think one of the other things that, since Mandy, you and I have talked about, Since we talked about it, one of the other things that's popped up a lot recently is greenwashing. So can you talk about where we're at? I mean, it's in the new, in the headlines a ton right now. Um, people getting called out, people getting shamed, I'd say a little bit, uh, sometimes for good reason.

    Right. Can you talk a little bit about how greenwashing fits into this equation and maybe talk about it from the investor's perspective.

    [00:17:33] Mandi Wedin: Sure. Okay. So, um, Joe noted, right? And you noted that what, what we're, what organizations of the industry, what investment managers are committing to do is sometimes very tightly defined because then they can meet it or talk about it, or they don't actually set a target, they just talk about what their values are and what their, um, philosophies are.

    So that's a lot of [00:18:00] that is avoiding greenwashing, right? Avoiding the headline, shame of You said X and then you did y we wanna know what happened. Right? Those are hard conversations. Um, um, I would say transparency matters a lot, so, as things have changed in your organization with your underlying budgets, with your d e I targets, with your decarbonization plans, with your board, uh, diversity composition, make the statement that it's different and here's what it's going to be going forward instead of ignoring it.

    Cuz otherwise you get a greenwashing label. And that's, um, that, and then, so if you, if you're the in pension fund, you're the ultimate money on making in allocation decisions on behalf of pensioners. You're allocating dollars to different investment managers, different in [00:19:00] investments. If the allocation, you've made an allocation to an organization that then has a big greenwashing scandal slash headline, that reflects really poorly on the pension fund and the advisor who made that, or the owner who made that.

    So don't ever embarrass your clients. Don't embarrass yourself. And so that those are the opportunities that organizations have right now.

    [00:19:23] Joe Gaspardone: Yeah.

    [00:19:24] James: of the things I think is interesting here, this came up in this morning's pro member gathering where it's actually, and then we've talked about it a little bit with how hard it is right now to actually operationalize E S G R is, and you hinted on it a little bit there, Mandy, if, if we're actually getting in, we as a real estate organization, we're actually getting into the weeds and we're saying, how are we gonna get to this target that we've set?

    And then we realize that that's actually really, really hard. Um, you're saying it might be time to come out and say like, here is what we're dealing with and being transparent about how hard it actually is [00:20:00] to get to that target that you've set. Is that what you're saying?

    [00:20:02] Mandi Wedin: Yeah.

    [00:20:04] Joe Gaspardone: Yeah.

    I, I think too, it goes a little. that, I, I feel, uh, I, it seems to me that in the market market as a whole, there's very little tolerance at the moment for mistakes. And I think that when you're trying to get from where we are to this very, very difficult to achieve goal, there needs to be a little bit of tolerance.

    People need a pass for making a mistake and being able to be transparent about it to a degree. And right now you see the market saying, well, you know, here I I, I'm meeting these e s G goals in my life sciences organization. Uh, we're above the industry, you. Benchmark, the industry average. It's like, well, that average is horrendous.

    So that doesn't really tell you're, you're [00:21:00] basically taking, you know, it's the cherry picking of statistics to spin a narrative to get yourself some points where, where I think where we really would benefit is saying, okay, we know where we are in this process. Let's, let's let people make mistakes and not just come crashing down on them because the industry as a whole is not developed enough and we're trying, and, and to give people a pass for honest effort would probably be very, very helpful over the ensuing two to three years.

    I, I think that that's, that would be my ask, especially commercial real estate where you're juggling so many challenges at once, right now, so many not just the business model and the economics. But technology and E s G, and, and it's all happening at the same time, just as the market is tanking. So it's just like, like give everybody, just, we're all ev you know, there, there are honest efforts being [00:22:00] made, but if it isn't exactly right, let's just, we should be strong enough to say, okay, we, we didn't realize that now we're doing this.

    [00:22:09] James: totally. So related to this greenwashing conversation, Mandy, you had a recent LinkedIn post, which i, I liked a lot. Um, you were talking about green bonds a little bit, and I I think you were also talking about why greenwashing is profitable now, but it won't be profitable in the future. Can, can you explain that, but also talk about, I I think there's a certain portion of this audience that might think they know what green bonds means.

    And can you just talk about what that even is to begin with, to start the conversation?

    [00:22:43] Mandi Wedin: Sure. Um, yeah, so I did thank you for, um, reading my LinkedIn post. It was, uh, it felt really, uh, wonky, geeky, but, um, it

    [00:22:55] James: struck me as a conversation that you were having in private and you were like, other people [00:23:00] need to

    learn this. I I do that a

    lot too, and

    I like those. I like

    [00:23:03] Joe Gaspardone: it was horrifying.

    [00:23:06] Mandi Wedin: Yeah.

    that too. So what's a green bond? A, a green bond is new capital, new money to be invested in projects that have a green focus. And green can be really broadly defined, right? Could be esg, it could be sustainability, could be renewable. It, it's fortunately, broadly defined. Um, and bonds are issued by countries, companies, uh, municipalities.

    and the post was about the last year only 30% of green bonds had a commitment to invest in green projects. So they essentially went from a hundred percent green bonds, investing in green projects to 30% green bonds, investing in green projects. [00:24:00] And that's cuz there's such a huge appetite for bonds, green bonds, and there's avoidance of risk on behalf of the bond issuer.

    So they'll say, okay, uh, we're gonna raise money for green projects, but we don't, we're not going to commit to doing any green projects. And it's this lack of transparency that is making greenwashing profitable. Right? There's so much demand. The bond market was down as a whole last year in issuances, but there were more green bonds issued year over year.

    Right. So that's where the appetite is. So they can sell you, you know, an apple when you asked for a cheeseburger because they're gonna buy any food right now and it doesn't matter if it's green or not green in the green bond world. And I was really like, uh, really frustrated and . I was like, what? I have to write about this as I bang it out on

    my

    keyboard,

    [00:24:57] Joe Gaspardone: the most eye-opening thing I've [00:25:00] post, I've seen in so long. I, I honestly couldn't believe it. I had to talk to you about it because, I like the, so for tho to simplify this, for some people, like 30% of the money raised for green projects is actually being used for green projects because the fine print in those bonds say we don't really have to do that, which is, I, I, I don't know how that, it just blows my mind that that can even be a thing that could happen.

    [00:25:28] James: So, so layman's question here, I I, is there a problem with having low, like, do we not have enough low risk green projects to invest in? Like, do we need more of those projects? Like, can this audience help de-risk and provide more projects for that audience?

    [00:25:49] Mandi Wedin: good question. So, th this was, um, my post was based on a, a paper, a research paper that was written by three professors. And so they asked the question in the paper of [00:26:00] why is this happening? Like, why, why is that acceptable? Why is the market buying this? And so that's one of the, um, proposals, is there are not enough green projects that can be funded by green bonds.

    Um, the answer is no. There's plenty of green projects,

    [00:26:18] James: Oh yeah. Oh yeah. Because I was gonna say, that's how you start. Everyone else in the

    audience slamming on their keyboards because everyone in this audience knows that

    there are

    plenty of projects out there.

    [00:26:27] Joe Gaspardone: It's totally bs. It's, it's, what it is, is a bunch of people who are used to spending money in the least risky way that have an opening to do that. So it's, is it less risky com relative to what? And if you have the back door open, you're always gonna go where the, the least risk is from your history.

    But if you've shut that door, there are zillions of projects to fund. It's, it's just, I, oh, I can't, I can't believe that that's possible. It's just so sad. It was [00:27:00] like, Mandy's post was like a fire hose feeding my cynicism that I don't want anymore of, and it was just like, no, this can't be.

    [00:27:09] James: be. So part of what I liked about this is you were saying why it won't be profitable for them to do that in the future. Can you talk about what door is gonna close for them here? Mandy?

    [00:27:21] Mandi Wedin: Yeah. I think it's the disclosure requirements and the regulatory framework that's coming, and that's coming on multiple fronts, right? It's, uh, it's at the s e C level for, um, any entities that are registered with the S E C are, there's gonna be more disclosure requirements. And the S E C's not telling you, uh, how to fix it or how to mitigate it, they're just saying, tell your investors what you're selling and then you're gonna be held accountable to selling that product.

    Right? And so, where there's no accountability today [00:28:00] or transparency today, there will be more in the future in the, the regulations coming out of other parts of the world, right? Asia and Europe. Are, they're in a different, um, place in the journey for disclosure in esg. And so they're more robust and in some cases more prescribed.

    So there'll be even more transparency demanded and reported.

    [00:28:22] James: Yeah. And, and one of the things that you were talking about in the prep session to this was how things are changing on the EU side of things. Can you talk about how more transparency is gonna be happening over on that side of the pond?

    [00:28:36] Mandi Wedin: Yes. So, um, I'm fortunate to be working on a project with a client who's launching a solar development fund, putting solar arrays on top of existing buildings as well as other, um, renewable energy projects. And they, uh, through that I've had the opportunity to learn a lot about the S F D [00:29:00] R disclosure framework, so it's EU Sustainable Financial Disclosure Regulation, and it's, here's what you're, Uh, much more prescribed about what you have to tell your investors your investment product is.

    So Article six is an investment product. That's one level of disclosure. Article eight is another level, and that's an investment product with e s G initiatives incorporated into it. And then Article nine goes to the next level, includes E S G plus a sustainability, uh, alignment, which essentially is do no harm to the climate.

    And the way that this is gonna feel different and is acting different is from an s FDR disclosure perspective. You have to make a pre contractual disclosure about here's what we're going to do in the ES and the G segments to be, you know, measuring carbon footprint to not, um, using [00:30:00] products or including your supply chain. Anything with forced labor to governance and attracting much more detailed, that's before you do it. That's your pre contractual, and then annually you'll say, here's what we did and how we did. And if you, if something comes up that's a red flag that needs to be disclosed, you will disclose that along the way, we didn't meet this target or this changed.

    And that is a very different standard than what we're experiencing in the US today around disclosures and setting goals and then

    accountability

    to meeting them.

    [00:30:37] Joe Gaspardone: I I really think James and Mandy, it's kind of the window into the future. Uh, I mean, we can see, we can look to that as, as sort of where we're headed on the journey and, and that will continue forward ahead of us. But it really is sort of a, a window in or a harbinger of things to come. And it needs to be like, this is just exactly the [00:31:00] process that we just talked about of codification standardization.

    Like, I need the things, I need those laid out so that I can meet them so that then I can connect the dots and say, here's how I'm meeting those things that are now officially things to, to, you know, raise my game to, to, to come up to. And that's critical because if it's, if it stays opaque, Then you're gonna have more green bond stories, , and nobody wants that.

    So that, that's the critical piece of the process as labor intensive and sort of, it takes a long time to get there, but, but it's, it's absolutely fundamental to the process.

    [00:31:45] James: Totally. And, and I'm just sitting here as I listen to you. Cause Joe, you brought up this similar point a couple times here on this episode. How many conversations about esg I've heard where now that you say that, I'm like, oh my God, it's so [00:32:00] obvious that we don't have that. And so a lot of the conversations are just kind of feeling around in the dark cuz we don't have this like process to point to with, you know, measurable

    results.

    Uh, to, and, and it's, it's sort of like what's coming to mind is like when we say zero carbon for example, well that's something that we can now sit here and say, oh, where, how much carbon are we? Like, where are we at on, on carbon? Because we set zero as the target. We don't necessarily have that for a lot of the other end goals that we we're talking about

    here.

    [00:32:37] Joe Gaspardone: Very much

    [00:32:38] James: so let's take this. We've set a nice little frame of reference context setting, you might call it. How is this sort of impacting smart building technology and the market for smart building technology? Who wants to start with that?

    [00:32:56] Mandi Wedin: So I wanna add one thing that's a layer to this, um, [00:33:00] question, and that is that there are so many, um, organizations that are selling me and my clients ESG solutions, which could be lots of different things because there are lots of different needs, but very few of them have their own e s G statements or goals or positions.

    [00:33:20] James: Totally.

    [00:33:21] Mandi Wedin: for my clients and I, that's a big red flag.

    If you don't do this, why should I buy

    what you're settling?

    [00:33:27] Joe Gaspardone: yes. I I swear this is like the golden thought here. It's it, and it goes, and tech, it's directly parallel to technology. Sh already are you eating your own dog food? That's what, how, what we've always said and, and that if you, I, I truly think, Hey, Mandy, you hit on, this is how you vet that solution provider.

    Can you show me your SG plan using your tools? I want, I would like to see that [00:34:00] in right there. Just show me that so I can understand how these tools work and how you're using it to achieve those. And if you can't do. Then that's, that, that gets kicked to the curb because that is the kind of fundamental vetting tool, um, that you, you where you can really say, are these people, at least they have something, you know, I can see it.

    But if they're, if they're not able to even produce that, I don't, I agree. I think it's very squishy. After that.

    [00:34:29] Mandi Wedin: Yeah,

    [00:34:30] James: so if I'm,

    [00:34:31] Mandi Wedin: of learning.

    [00:34:32] James: if I'm like a, let's say I'm a solution provider. We've been talking a lot about vital roles recently. I'm, uh, msi, right? And I'm an MSI hearing this and I sell software products and I sell projects. How can I sort of, and, and, and my marketing and sales people are using ESG to sell those software products and solutions, right?

    How can I make it so that when I go to a building owner, I [00:35:00] am eating my own dog food? How can I do

    that?

    [00:35:03] Joe Gaspardone: Show me. Let's go back to Missouri. I'm, I'm in the, I'm in the state of Missouri. The show me state, show me your plan. That would be a great

    [00:35:12] James: Okay.

    [00:35:13] Joe Gaspardone: Um, on the MSI side, on the technology side, show me your office. Can you, do you have that mythical single pane of glass where you can see everything that's happening in that office? Have you outfitted your office with occupancy sensing that is controlling various aspects of heating, cooling, lighting, you know, have you put the. An investment to show to your own space That is translatable to me that as a, when I'm putting on my ops hat as a potential customer, that's gonna tell me a lot, maybe, maybe more than your reference clients who are gonna say nice things.

    [00:35:53] James: Totally.

    [00:35:54] Mandi Wedin: it, you can, you can go, you can look at, um, your. [00:36:00] biggest investor, your biggest client. And what does their e s G report say? What are their values? What are their targets? And what are, what are we doing already or what can we do to make that journey? Right? Do we measure our carbon footprint? Do we make decisions that helps reduce our carbon footprint, right?

    Do we, um, have a d E I program? Do we even use those words? Do we talk about diverse team members? Do we have diverse team members? Do we value diverse, uh, thoughts in the workplace? You can talk about the supply chain and what you recommend, what your products are. Do you confirm that they're not made with the use of human, uh, forced labor, right?

    Like there, there's different things that are regularly high ticket items on an broad scale ESG plan that you can understand how you can play in. , uh, into that value chain, the big, broad value chain to meet those goals, [00:37:00] to support the goals of your clients, right? Because again, don't, don't embarrass your clients by installing a product that it turns out was made by young, uh, underage children in a different part of the world, right?

    That hurts on so many different levels, but it's really an embarrassing moment for your client and an embarrassing moment for yourself.

    [00:37:20] James: and you can say that same thing about the embodied carbon of that device, or you know what, whatever other metric that they have a, a goal around. Totally. All right. What other, what other ways are esgr market conditions, trends impacting this smart building marketplace?

    [00:37:39] Joe Gaspardone: Well, I mean, I, I, the, the truth is, and I, this is gonna get into the broader topic, but without going too deep yet into that, um, there's, there is a, you know, we're going to, this is gonna be a struggle, not for every single asset and every single vertical, but, [00:38:00] but as a whole, the c. Is going to get pinched financially for a long time, a lot longer.

    People have been very polite about it. Probably Mandy and I were too polite the first time given our backgrounds, but this is, this is, you know, right now it's a five year problem that it, it takes very long to recover in real estate. It's not like the macroeconomic economy. So we are going to see financial struggles and the master struggle for technology and ESG is going to be, can we continue to develop the standards and sell the products enough to support the clients at a time when they can least afford it?

    And it, it's going to, there's gonna, there's gonna be a lot of distress in the market because of.

    [00:38:54] Mandi Wedin: Yeah. I also think it's, it's, it's changing. So we, we [00:39:00] went, we've gone from mostly a desktop exercise for E S G certifications, reporting policies and procedures, contractual updates. As much of that is, could be done. And that's important cuz it's laying the foundation for what's next. and what's next is taking it into the building and changing human behavior.

    And that's hard, right? We talk about that in many instances and within the Nexus community. And it, it takes time and money and commitment. And as Joe noted, we don't have a lot of time. We have a lot less money this year than we did the beginning of the year last year. And our commitment, uh, maybe is the same, but our ability to execute has potentially changed.

    And as we're seeing with some headlines, maybe our commitment is changing too. So making progress, um, deploying technology, deploying, [00:40:00] um, solutions that will meet these ultimate e s G goals. Remembering e that s g is about getting better results through better managing risk and better deploying resources.

    it's harder today and it's only gonna get harder while the real estate market is in complete flux.

    [00:40:20] James: Well, let's go ahead and just talk about where the market is and then maybe we could circle back to, once we talk about the market, we can circle back, back to smart buildings. So let, Joe, let's go to you, like, let's just do this, you know, sort of macro market update. What, what's happening right now? We've talked about a lot less money.

    What? What do you

    mean by that?

    What's going on? And it could be

    [00:40:42] Joe Gaspardone: Oh boy.

    [00:40:42] James: last time

    we

    talked about

    this as well.

    [00:40:44] Joe Gaspardone: If, if the, if my last statement was a bucket of cold water, this is gonna be a water tower of cold water. Um, but, but look, we, you have to, you have to acknowledge where we are and this is where we are. Okay. Just, just, just take these five points [00:41:00] in. Interest rates are double what they were 18 months ago. Vacancy is double what it was 18 months ago. Rents are substantially lower, like way down for B and C class properties. Kind of a pretty, pretty much treading water at the A class. But the A class is very small, so B and C properties are down. You know, vacancy rates are, are, are double, triple what they were.

    And um, there's a reduced demand for space. That's number four. So you've got the same tenants taking 15, 30 ish percent less space than they were and probably the least often forgotten aspect is on the expense side of the model. Expenses have risen. 11% is the kind of average you hear floating around.

    That's a huge increase in expenses. So you have a [00:42:00] quintuple whammy. I double whammies. I've seen triple whammies. This is like five. All converging on the market at once. And is multifamily trailing doing better? Yes, but it's, it's just, it's trailing and it's moving in the same direction as, say, office space, which is the hardest hit.

    Life sciences is going earth and just like coming to a, to a, to a hard stop and probably gonna go that direction as well. So the truth is, commercial real estate is a hundred percent in a recession. The economy as a whole is not commercial real estate, and especially office is 100% there. But it's at the, you know, it's like the train that's going down the hill and it's just coming down, but you know where, where it's going and there's no more track down there.

    And you can see a wheel wobbling. But unless Superman [00:43:00] comes along, it's happening. So, you know, the smart companies are gonna figure out where the money needs to be spent and get there to meet the market and continue to survive or excel in a very difficult market. And so that is e s g tools have to be done.

    There are, there are certain things that just have to happen irrespective of tight budgets and certain core technologies have to be done for local law 97 in New York for other markets that absolutely have to meet certain benchmarks and energy star compliance and things like that. So there are opportunities in there, but the truth is there's gonna be a lot of distress, both asset distress and company distress, uh, solution provider distress over the next.

    And it truly, I mean, if you aren't looking at at least five years, then, [00:44:00] um, you, you haven't been around long enough because this, these cycles are long and I've, I'm sorry to have to say, but it's the ab absolute truth. Unless, you know, by some miracle something changes that just breathe life in, in a very, very quick way, it's just gonna happen. And that, and that has never happened before. That has never happened. There's no, you know, the, the Fed doesn't just drop interest rates back to zero . So it's, it's, it's gonna be a while.

    [00:44:32] Mandi Wedin: it really we're sitting in the moment of peak uncertainty, right? All that is happening while, um, we're waiting. We broad, we macro as well as the real estate industry is waiting to see at what point interest rates will stabilize from the fed's perspective and then start to come down, right? So when, when that moment happens, and it'll take a couple months for there to be some trust or expectation [00:45:00] that it's now a trend and not just a blip, then you'll see activity resume and you'll see transaction, more transaction volume happen.

    But we're in the moment of peak uncertainty because interest rates are high and no. Clear indicator of when they'll drop. The way we've used real estate, particularly office has changed, and we don't know where that's going yet. And we're, uh, the broad economy is anticipating a recession, so we're everybody's planning for and bunkering not just real estate, which yes, I agree with Joe.

    With the second interest rate hike. Back in the spring, real estate went into a recession as defined by zero growth or negative growth in transactions, right? Those three are big pressures, and we are waiting through them and the, the market is paused, still paused as a kind word, frozen dead. If you're trying to sell a mediocre asset [00:46:00] because your lender is telling you you must sell because you've tripped a covenant,

    [00:46:03] Joe Gaspardone: and,

    [00:46:05] Mandi Wedin: a tough

    [00:46:05] Joe Gaspardone: and and where are we? I mean, in every major metro market now, buildings have just been handed back keys back to the, to the lender. Um, that, that big, big buildings in every major mar market. And there's a lot of analysis occurring now in these large companies to determine which ones to hand back and they're gonna, so there's gonna be another, it's sort of like a trickle that's getting gonna hopefully stop at a small flow, but it's going, those things are going to happen over the next 12 months.

    And those pressures, those five pressures that I talked about are, some of them can go away with stability, but then you're still sitting at a lower asset value, significant. 20 to 35% is a very good range right now from, from the highs that, that, that, you know, when you talk about a third of an asset [00:47:00] value being knocked off, that's, that's, you know, all that's as bad as we've ever seen, put it that way.

    So yes, people are very good now. They're planning and they're, it's happening in a way that is healthier. So to hopefully mitigate some of that, that has also not really happened before. There's been a very good, very good job. Dead to equity is much better and a lot of the fundamentals are better. So that's gonna help.

    But the truth is, when you're staring down, just having lost, you know, an a hundred million building, 30 million of it, that the pressures are, I mean, budgets are gonna be as tight as you've ever seen. So that's where I talk about getting back to the core solutions. That's, that's gonna be really critical.

    [00:47:49] James: Okay, cool. So now with that context, we have the ESG happening, we have general market conditions happening. Now let's kind of talk [00:48:00] about what are the best strategies for the technology marketplace to sort of adopt right now.

    [00:48:06] Mandi Wedin: So I would say one piece that, um, is in is informing and influencing the adep, the adoption or the investment into technology is you have another decision maker at the table for a lot of these projects, and that's the lender. They probably. Two years ago didn't have to be at the table cuz the loan was performing and the asset was performing.

    But now the stat I read the other day is 60% of the office buildings are economically owned by the lender, which means they're, um, scrutinizing expenditures. They're not, uh, saying yes or no, they're just looking very closely. And as the owners are trying to work, the borrowers are trying to work their way through it.

    So if you're gonna make a big investment, there needs to be a very sound reason and [00:49:00] there always has been. But now there needs to be a sound reason that, um, it makes sense for cash flow to come out of that asset. And so it's another layer of decision making process. It's another, um, challenge of time and, uh, information and it's super opaque as the So solutions provider, you don't.

    You're not talking to the lender at the table, right? Someone else is probably, you know, three games of telephone away. But that, um, is part of the process today. And there's, there's also a difference between why is, why is this difference from today different than the gfc the great financial crisis? And a couple things come to mind.

    One is lenders didn't take buildings back as quickly then because they saw a way forward for where the building would be when the uncertainty abated and there was more clarity. And they wanted that to continue to be in the hands of the operator. The expert [00:50:00] today, they don't have that clarity of where that office building will be in function.

    So they don't, they wanna have control, right? So they'll take it back. And the second is just where the leverage levels were going into the GFC and where they are today as the value drop. There's potentially, if there's still money on the table and the value of that building, the lender wants to take it.

    And mo there were more, um, multi-family assets that went into default under their loans than office in the last report, right? So it's not just office buildings, right? It's broader. But when you think about deploying technology and you think about the solutions and how you're gonna win, um, win the sale, win the execution, it's really important that you know the pressures of the owner.

    And you hear me say this all the time, like, what's important to them and why should you care? Because that's the only way you're [00:51:00] gonna get

    that

    contract signed.

    [00:51:02] Joe Gaspardone: know your customer, speak their language. If you can do that, then you will understand all of the hurdles they have sitting behind that, and that that would go to my one piece of advice. It's one word core, and it's, what does that mean? It's. your solution needs to be core to what the building needs in a tough environment.

    Your relationships, your core relationships are the ones that are gonna get you through the tough time. Focusing on those, you know, and not scale is going to be critical if you wanna get through and make progress and working through your core relationships. In real estate, commercial real estate in particular, it is such a small number of people under this very broad hood of assets.

    Those, those core relationships are critical [00:52:00] as you try to get through and, and, and, and grow, um, during this tough time. And then the other thing is, James, it comes back to your marketing fluff. You have to deliver exactly. what you say you're going to deliver. You can't have, you cannot have one single thread of marketing fluff in your delivery in this market for the next, I'm gonna say five years.

    You can't because it will get sussed out. It will get exposed when you can't do something that you represented and you, you, you will not survive the five years that is, that's like a third rail now, um, if it weren't before, it's always been, uh, it's been, been the advice given, but now it's truly a third rail.

    And if you cannot deliver that thing you're saying you can, that's going to you, you won't, you won't make, you won't make [00:53:00] it through the.

    [00:53:00] James: So I want to kind of pull back in something from the last episode, which we talked about. What are you delivering? And I think last time we talked about we're delivering a, uh, repositioning of assets sometimes. So when the assets are changing ownership right now, which it seems like they are, is that a piece where people could look at that and say, that's an opportunity for us still?

    Is that one of the strategies that applies?

    [00:53:28] Mandi Wedin: definitely. Right? And that, that's cuz there's a transaction and there's dollars available, right? And if you're gonna keep the asset, right, you've got the investor, the owner's gone through a wholesale decision and they're keeping it so they're reinvesting in it. So what are they investing to meet their reposition

    [00:53:47] James: how are they repositioning? Yeah,

    [00:53:49] Mandi Wedin: Yes. And that could be we have a net zero carbon target. We need to start the plan today. And that means reduce, reuse, and recycle, right? So [00:54:00] what's the reduction piece of it? And then what's our capital investment into it? So that understanding that that's a framework is a great place to meet

    [00:54:10] James: I feel like that's huge.

    [00:54:11] Joe Gaspardone: Yeah, well, the C and b prop, the majority of the market B and C class properties, they fundamentally have to undergo that transition to survive even after being taken back by the lender. So there will be that. That's the good news, is af through this painful cycle, the recapitalization at a lower value open, that that lower value opens up new funds to come in to make that transition happen.

    So that is the opportunity. in the process to come in and help make that transition. That's gonna become a big piece of this business going forward. And, and that, you know, if the, to the extent you can get in and be seen and visible [00:55:00] there and deliver that, that it's a complicated process, very complex to take a B or C class property and move that up the chain for, for real.

    And so it's not redoing the lobby anymore, it's fundamental technology and ESG commitment driven move up from a C to a B or a B to a b plus or an A, an a so that those are expensive, but the money will be there cuz they, they, they, it's

    [00:55:30] James: And that's where I've been trying to, on the ESG panels I've been sitting on, I've been trying to communicate that to the people that maybe sat there five years ago and said, our value proposition is energy savings. And if an asset is being repositioned for ESG or for decarbonization, your asset or your, your value proposition is energy savings and right.

    You, you need to start to think about how you fit into this repositioning process. [00:56:00] Um, I wanted to get, we're, we're kind of running outta time here. I wanted to get to one last question for you guys, and we talked about. Last week. I think this will be last week by the time this comes out. But, um, Joe Amador and Gene Casey and I talked about this.

    It was this tweet thread that we'll put in the show notes and the tweet, the, the original tweet said, PropTech startups. And this is super related PropTech startups that charge per unit recurring SAS fees and promise, either amorphous process efficiency improvements or worse, I'm using air quotes here, data driven operating insights, which is everyone are going to have an incredibly hard time generating new business in 2023.

    Can you guys unpack that and unpack that from the lens of, if I'm one of those vendors and I go to my own website and it says Data driven operating insights, how should I be like thinking about my life right now?

    [00:56:53] Joe Gaspardone: Chat bot rewrite.

    [00:56:59] Mandi Wedin: [00:57:00] Okay. So I would say that, um, the data driven operational insights are the means to the end, which is better performance and better results. You can talk about insights and you can talk about data being valuable, but you'll have to get to the action piece and the results piece of it, and if you, so my perspective is if you can produce actions and produce improved performance and results, if you choose to charge per unit or percentage or per square foot, the landlord will probably pay for it if the math works for them, right?

    But if you're charging, um, a dollar per unit and you're just gonna get more data just then you've only gotten half of the picture. For the full cost. So they want the entire picture for the entire cost. And so you're, you're only

    [00:58:00] halfway

    there.

    [00:58:00] Joe Gaspardone: this, this comes back to the the problem that it's, it's directly connected, which is I've got a dashboard for my sensors and a dashboard for my HVAC and a dashboard for my lighting control and a dashboard for my, and, and that will not, and before people could tinker in that world and see, well, what does that really do?

    And what insights do I get that I can act on? And there was room to test and to, to, to explore a little bit in this universe. But now I have even less dollars, fewer resources. My smart building team just got axed. My, you know, two of my enter, my five enterprise architects are gone. Like, I need you to. quantifiably. Show me how to, these, some of these things are gonna be brought together an usable way that will drive my [00:59:00] expenses down. When you can do that, you're in, I you got my interest because I, I can still make the case for that. If you're sitting on the periphery out here, I cannot have my engineer going to three different places to look at something and then go over here to see what if it's real.

    And it's just, it's not, it's not on the table now. And so that, that's how I would sort of frame it.

    [00:59:25] James: Love it. I think that's a good way to, to close off this, this version of our, our ongoing series. Let's end with carve outs. So what, what book, TV show, podcast, movie, documentary, insert your media choice, media of choice here, uh, has had a major impact on you lately. Let's start with you, Mandy.

    [00:59:47] Mandi Wedin: Sure. So I have two for you. One is, um, chat, G P T. I've posted about this recently. The, um, bias in our data, right? Algorithmic bias [01:00:00] in our data and what that means to. Society to our industry, to investments. It's far reaching and chat. G p t is the, the phrase, the current use now. So testing that out and being like, Hmm, okay, this writes like my talented sixth grader.

    Awesome. I ask for a compare and contrast for information. Okay. That also sounds like my talented sixth grader. Great. I I'm not at risk of losing my consulting clients right now, maybe in five years. Right. But the answers that it gives and the data sets that it pulls from, what are those? And if we use only the past, we're gonna build essentially our future that looks exactly like the past.

    And for some of us on Earth, it hasn't been that great. So how can we do it better? Cause we're, I've been spending a lot of time reading and

    [01:00:50] James: absolutely. I feel the same way.

    [01:00:54] Mandi Wedin: go

    [01:00:54] James: gonna say real quick, I, I feel the same way about the time I've spent on Jet Chat Chat, G p [01:01:00] t asking it about smart buildings topics. I feel like the answer it gives is very rooted in how things were or how, you know, they were five years ago, 10 years ago. It, it, it doesn't really provide a perspective on where we should go or how we

    should get

    there. And if you go to the Nexus Slabs website, nothing on that site was written by a chat G P t

    [01:01:24] Joe Gaspardone: fair? I, I would, I would add cha. Um, here's the, uh, here's what, uh, if your solutions provider company, so say just lighting your lighting control. Go to chat g b t and say, explain the top five reasons a building should deploy lighting control to a, in to a five-year-old, you know, play with the terms, but basically say, here's my solution and explain the top five reasons, uh, to a five-year-old.

    What, [01:02:00] what you will get is shockingly helpful. For building staff and I does not to cast aspersions on the building staff, it's just broken down in a way that is like what would've taken years of marketing wordsmithing, um, in a way that you can take slightly change and actually probably explain better to a non-technical audience your solution.

    It it, it was, it was shocking to see like the top 10 reasons for a smart building explained to a five year old. It's unbelievable. It's like, oh my God, that's actually going to be translatable to people who really don't understand all of the nuance and all of the technical stuff.

    [01:02:47] James: Totally. Okay. Sorry Mandy, we interrupted you. you.

    had another one.

    [01:02:51] Mandi Wedin: Oh, my second one is I'm reading dinners with Ruth by Nina Totenberg. Nina Totenberg is a NPR Supreme Court [01:03:00] correspondent, and so I'm enjoying the connections to DC and R B G and uh, and I listen to Nina on the radio on a regular basis too.

    [01:03:08] James: Awesome.

    Joe, how

    about you?

    [01:03:12] Joe Gaspardone: Well just dawn on me because you, you mentioned in the last few podcasts, um, the movie contact and everything everywhere, all at once. And, um, in fact, everything everywhere, all at once could actually explain the challenges in commercial real estate. Right now, , it's, it's literally,

    [01:03:29] James: a great

    [01:03:30] Joe Gaspardone: it's everything everywhere, all at once.

    But, um, thi this book series, the first book is called Hyperion, and if you are a fan of contact, It was written, it won the Hugo Award. Many, many awards. But, um, if you're a fan of contact and everything everywhere at all at once, Hyperion is the one of the most well-written books I've ever read. One of the deepest, deep, deep, deep themes [01:04:00] and layers of, um, of just well-crafted writing at weaves somehow in a science fiction book, poetry from Keith's into the mix.

    It's in, it's an, honestly, as you hear it or read it, you will say, I can't believe this genius, like even the highest level genius would struggle to write this ma, these, it's four books, these masterpieces. They're, they're, uh, I learned so much and I got so much out of them philosophically. It's just very, very deep. Hyperion. Start with Hyperion.

    [01:04:37] James: Love it. And that's the first of

    four.

    [01:04:39] Joe Gaspardone: Yep. you will, if you, if you like that, you'll, you'll be locked in for all four. They're, they're, they really are masterworks in

    literature. Yes.

    [01:04:51] James: share mine before we, we, we end this. Um, so the, the third season of Ted Lasso is coming out, uh, in a couple weeks. I would, [01:05:00] if, if anyone hasn't caught up on season one, two, it's just a great, it's just a great show. You don't have to be a soccer fan. Has nothing to do with soccer, really. It's more about being a human.

    Um, so we resubscribe to Apple Plus to get ready for that. But on Apple Plus there's a show called Shrinking. It's Jason Siegel and Harrison Ford. And Jessica Williams. And I'm like, four episodes into it, my wife like pulled, I was like, I don't want another show. And then she like pulled it in me into it and it's just so good.

    Anyone that's been through therapy before would will just like, love the lightheartedness around the therapy process. It's so good. Highly, highly recommended. If you like Jason Siegel, you'll love this. Uh, and, and Jessica Williams is just a amazing, amazing person to, to watch, so

    [01:05:48] Mandi Wedin: I agree. I, I laugh out loud at one of the episodes

    [01:05:52] James: Oh yeah,

    [01:05:52] Mandi Wedin: like, Adam, uh, that my whole family is like, what? I'm like, hush. I'm watching.

    It's funny.

    [01:05:57] James: yeah.

    [01:05:58] Joe Gaspardone: wait. I'm in [01:06:00]

    [01:06:00] James: You're in. Love it. Um, cool. Well thank you for this. You too. I think this will be super insightful for a lot of different stakeholders in the audience and we'll catch you next time. I hope we have a less bleak market outlook in the next quarter.

    [01:06:15] Joe Gaspardone: Me too.

    [01:06:18] Mandi Wedin: We tell it like it

    is James,

    [01:06:20] Joe Gaspardone: That you gotta

    [01:06:20] James: That's fair.

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