Podcast
69
min read
James Dice

🎧 #139: Q1 2023 M&A Roundup with J³

February 23, 2023
"Even with heat pumps and electrification, demand flexibility is a really big issue. You need controls to be able to use or roll back energy at the right times and that becomes increasingly important as you have more variability in terms of the generation of energy on the grid."

—Joe Aamidor

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Episode 139 is a conversation with Joe Aamidor of Aamidor Consulting and Jeanne Casey of Nuveen. If you add me in, you get J³.

Summary

This is the fourth installment of our M&A Roundup series, recorded in February 2023 all about what's happening in the marketplace right now.

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

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

Mentions and Links

  1. Nuveen (1:18)
  2. Aamidor Consulting (0:40)
  3. Fred Wilson's Post: What Will Happen In 2023 (7:05)
  4. ChatGPT (8:40)
  5. Matthew Gottesdiener's Tweet (9:01)
  6. Nexus Labs Courses (17:22)
  7. 🎧 #058: Darlene Pope on JLL's 3-30-300 rule (18:37)
  8. Joe's Newsletter: Smart Building Insight (21:14)
  9. Joes's Smart Buildings M&A List (31:30)
  10. Energywell x Think Energy (31:50)
  11. Insite x Sol Vista (32:06)
  12. Blackstone x Emerson Climate Solutions (32:01)
  13. Copeland compressors (32:31)
  14. Infogrid x Aquicore (32:39)
  15. NRG x Vivint Smart Home (33:01)
  16. Legence (Blackstone) x LORD Green Solutions (33:41)
  17. Daikin x Venstar (33:59)
  18. S+P Global x Shades of Grey (CICERO) (34:19)
  19. Sealed x Inflsense (34:35)
  20. Lessen x SMS Assist (34:38)
  21. Rogers Building Solutions x Sluss+Padgett (35:17)
  22. Convene x etc.venues (35:30)
  23. Siemens x J2 Innovations (43:11)
  24. The Untapped 87% Whitepaper (45:34)
  25. Blackstone x Therma (48:58)
  26. GRESB x Asset Resolution (51:38)
  27. 🎧 #070: Will Cowell de Gruchy: Infogrid (53:47)
  28. 🎧 #018: Logan Soya: Aquicore (53:47)
  29. The Goldfinch by Donna Tartt (1:05:57)
  30. Ted Lasso (1:07:38)
  31. Atlas of the Heart by Brené Brown (1:08:39)
  32. Brené Brown: Ted Lasso (1:09:31)

You can find Joe and Jeanne on LinkedIn.

Enjoy!

Highlights

  • Jeanne's introduction (1:05)
  • Joe's introduction (1:52)
  • The economic environment that startups are in today (2:23)
  • What investors are actually looking for in a startup (8:55)
  • 2023 predictions and hot takes (20:55)
  • M&A trends in smart buildings (31:30)
  • Daikin x Venstar (40:38)
  • Legence (Blackstone) x LORD Green Solutions(46:41)
  • GRESB x Asset Resolution (51:38)
  • Infogrid x Aquicore (53:31)
  • Carveouts (1:05:44)

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

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2. Join our community of smart buildings nerds and gamechangers here (400 members and counting)

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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 Dice: Hello and welcome to the Nexus podcast. It's so nice to have you two back. I have Gene Casey of Nuveen and Joe Amador of Amador Consulting back for the fourth edition of the J Cubed m and a podcast series. Is that what we're calling it? Um, let's start with some intros. For those of you that haven't caught up with our first three, and if you haven't caught up with our first three, there's no need to really go back cuz this is kind of about what's [00:01:00] happening right now in the marketplace.

So let's start with Jeanne. Can you introduce yourself? Talk about what, what you do.

[00:01:07] Jeanne Casey: Sure thing. Thank you so much for having me back, James. Uh, thrilled to be here. My name is Jeanne Casey and I'm the global head of PropTech and Innovation at Nuveen Real Estate. Um, for anyone not familiar with Nuveen, we are a very large asset manager. We're number four, number five, largest real estate owner in the world across all.

Um, sectors of real estate with about 150 billion, maybe 160 by now. Um, A U M I lead our venture capital investment program, so we're making direct investments into PropTech startups. Um, and I'm also head of innovation, so I serve as kind of the internal expert on all things, uh, startups and venture capital.

[00:01:50] James Dice: Awesome. Thank you. How about you, Joe?

[00:01:52] Joe Aamidor: Yeah. Thanks. Uh, thanks James. Good to be here with you and Jeanne. Uh, Joe Amador. I work in the smart building space, really product [00:02:00] market strategy consulting. So I work with small startups, large startups that need help in that product strategy realm. Competitive analysis, voice of customer market sizing. I do a lot of work with investors, usually diligence of specific deals, but sometimes other things.

And I do a little bit of work with owners and operators when they're looking for solutions to solve the smart building related problems that they might be.

[00:02:20] James Dice: Totally. Let's start with, we've done this, I think the last two episodes, um, in this series where we just talk about kind of the macro environment for startups in the smart buildings industry. Um, gene, you're our go-to and the analyst for this, for this topic. Do you want to kick us off what's going on in the, the marketplace right now?

[00:02:45] Jeanne Casey: Yeah, so at the risk of, you know, having a very similar conversation to the one we had three and now six months ago, um, things have slowed down. Um, I don't think that's news to anyone. [00:03:00] Um, but I think overall we've seen the, at least the beginning to kind of middle innings of a fairly healthy reset. Um, so if we're looking at the overall venture capital market, um, finding the market clearing price or, you know, the valuation of a.

Uh, that is raising a round of funding, whether it's a seed round, a series A round, a series B round, that process is taking a bit longer, um, than it did, you know, 12 months ago, 18, 24 months ago especially. So there's fewer term sheets, but rounds are still being raised. Um, there have also been, you know, I would think a broad set of expectations that have been reset both on the founders and the company side, as well as venture capital investors.

And that's really all around a foc, a greater focus on business fundamentals, [00:04:00] a path to profitability and controlling startups burn rates. So there is overall a greater expectation, um, and an onus placed on companies to demonstrate that they can achieve the same level, um, of commercial outcomes or achieve those KPIs.

Or milestones that they've aligned on with their investors with, uh, smaller amounts of funding. So really do more with less, I think is a tagline for the last three months. Um, again, not to repeat a lot of what we've talked about on the last couple of these episodes, but we have definitely seen valuations come down that's been most pronounced in later stage venture capital.

Um, but it is definitely true and has been felt and is being shown up now in kind of year end 2022 data across the board. Um, but again, more pronounced the [00:05:00] later year looking, um, that is maybe, uh, true across the board except in two key areas, uh, both of which have a lot of relevance to smart buildings in all of our smart buildings slash PropTech worlds.

And that is climate tech. Um, valuations have not cooled off as much as, you know, kind of more point SAS solutions, let's say. Uh, and the other one is anything to do with ai. And so that's, that seems to be the new buzzword. Um, I think there's a ton of promise and excitement ahead in both of those categories for sure.

But there's also a lot of writing, um, of tailwinds for any company that kind of, you know, loosely, uh, has a theme in one of those two areas. Um, and then I'll, I'll end by saying I think, you know, one indication that we've really turned a corner is that capital that was previously available to what I'll call like middle of the road startups, ones that are not absolutely [00:06:00] killing it, and converting pipeline customers to paying customers with real revenue.

Like growing that revenue really quickly. If you're not doing that, it's really hard to go back to your existing investors for what previously was fairly easily accessible. Bridge rounds or interim rounds, or we saw a lot the rise of like the seed prime or the seed extension or the a extension round that is much less common.

Um, at least what I'm seeing on the ground right now. So I'll say overall, um, slow down is, is not surprising to anyone, but this feels like a fairly healthy reset that we're still in, you know, ending two, three, maybe four. Um, so fairly early on still.

[00:06:47] James Dice: Got it. Super insightful. Joe. Joe, what are your thoughts?

[00:06:52] Joe Aamidor: Oh, I, well, you know, it's funny, when we were prepping for, for this discussion, we, we just, for everyone who's listening, we [00:07:00] just have some notes. We just throw ideas in there. We kind of. Caress that into a, an outline. But you know, Fred Wilson has, has a, a blog post, we don't have to talk through it here, but he noted one climate is the one area they're investing that's kind of been spared, I think is the term he used from some of the carnage.

I dunno if he used carnage. He definitely used spared. Um, so that aligns gene with what you're saying. Um, but I also think the point on AI is interesting just because on one hand, yes, it's a hot area, but there's a lot of data analysis techniques in smart buildings that I think over time have become, I, I remember when I was a product manager, we had just a, a statistical analysis tool to do measurement verification, right?

So validating the savings of an energy project and that kind of became, oh, let's call this machine learning. And then that became, oh, let's call this ai. So it's kind of a slippery slope as well of with the, that market being somewhat spared. More companies will say, oh, well this is actually ai when it's like, well, you know, it's like definitely like a data driven analysis [00:08:00] approach.

So it'd be interesting to see how all that plays out. I agree with you though, Jeanne. I just,

[00:08:04] James Dice: I think, yeah, it's a recipe for, for overhyping what we were already doing in, in the industry. I think it's funny because the, the first thing when the, when the rage started coming out about chat, G p T, the first thing I thought of was data modeling in the smart buildings industry. So you take data out of building and we're trying to figure out how to tag it with the right metadata tags, and there are, you know, very smart engineers out there that are doing that all the time.

That type of generative AI is perfect for that. But I think a lot of the companies that are out there building products around that use case, they're, they are, were already doing it before chat, g p t ca, like they were already doing it. So it's not like that

[00:08:44] Joe Aamidor: yeah, yeah, yeah, yeah.

[00:08:45] James Dice: of that product to the market really.

Really changed things a whole lot. Anyway, that's a rabbit hole. We don't have to go fully down today.

[00:08:54] Joe Aamidor: Yeah.

[00:08:55] James Dice: Um, one of the things I wanted to go back to real quick, [00:09:00] um, and this kind of relates to the Twitter thread that you brought up, Joe, in our sort of prep discussion, gene, you said something along the lines of, it's like sort of getting back more into business fundamentals, I think you said.

Can we just like really talk about what that means? Like what are the actual things that investors are looking for to come into the next round? Right. In a startup, it it's customers and it's traction and it's, uh, repeatedly being able to prove that you can find new customers. Right. Is that, is that kind of what we're talking about here?

[00:09:34] Jeanne Casey: directionally. Absolutely. I think where the nuance comes in is it totally depends on what round of funding and what stage of maturity company you're talking about. So for, you know, a pre-product company or a pre-revenue company or a company that just has like a beta or a very preliminary pilot, you know, those kind of key performance indicators or [00:10:00] KPIs look very, and the metrics that investors are looking.

Four, um, to invest and to find that market clearing price, I'm calling it. But really just like the valuation of that round, um, they're gonna look really different than a company raising a series B or a series C that has five or 10 or more million dollars of revenue from customers that have been, you know, customers for multiple years.

So now you have the ability to do a cohort analysis and understand churn of customers and the ability to upsell. Um, and so you can get into all the kind of metrics. Um, it also depends on business model. So are we talking about selling your software? Are we talking about tech enabled services? Are we talking about a marketplace where you can analyze a take rate and the ability to like uphold that take rate over time?

Or is there gonna. Price compression as you know, kind of, uh, marketplace grows [00:11:00] and those players can potentially transact off the marketplace if the, the clearing take rate is too high. Um, these are all kind of, you know, would be my follow-up questions. Um, but I'd say generally investors are always, and in early and mid-stage, um, venture capital investors are always looking for three things, or at least three buckets of things.

The first is a really strong team, and in then this environment that's arguably even more important because you want to be in backing folks that are really great fiduciaries of capital, meaning they're gonna be really prudent with their spend, they're gonna be really smart and hiring, um, and controlling that burn rate and achieving, making sure that they can do more with less, like what we were talking about up top.

um, and that they have the domain expertise. Do they have, if they're claiming they're an AI company, do they actually have, you know, AI engineering talent? Are they able to [00:12:00] produce the products that they're, you know, nice looking pitch decks, claim they can, um, two is traction. And so all of, you know, being able to actually convert, um, customers to two real dollars.

And so it's nice to be able to throw a bunch of like, pilot logos into a deck. But are those people paying you? How much are they paying you and are they paying you more over time? Um, or is that like a one-off little, just like test case, which is more common now in, again, in this environment to convert a pilot customer to like a, a th a full customer.

Um, and then I would say three, of course, the technology. Is this a differentiated product? Is it solving a real problem? Again, even more important in a, a macro environment like this, because customers are only gonna spend money on things that are solving real, real problems and helping their bottom line, which in the case of [00:13:00] PropTech in the real estate industry, is most often, you know, is it improving NOI at the end of the day, either today or overtime?

[00:13:08] James Dice: And that's where this Twitter, Twitter thread comes in, Joe, which we'll put in the show notes. I think this is super insightful because Gene, you just brought the perspective of what does, uh, startup need to prove to investors, but on the other side, they also have what do we need to prove to building owners, which is where this, and, and the expectations on both sides of them are ratcheting up right now, it seems like because of the macro environment in the real estate industry.

So, Joe, can you talk about this, this kind of Twitter thread and kind of what it goes into in terms of these expectations,

[00:13:41] Joe Aamidor: yeah. This is, uh, it's, it's from, and we'll, we'll share it, uh, Matthew Goddess Deaner. Um, and I'll just read one of the, I think it's the first or one of the, the tweets PropTech startups that charge per unit recurring SAS fees and promise, either an amorphous process efficiency improvement or worse data-driven operating [00:14:00] insights are going to have an incredibly hard time generating new business in 2023.

So, again,

[00:14:04] James Dice: love this.

[00:14:05] Joe Aamidor: Yeah. And the whole thing is good. Um, I'm not

[00:14:08] James Dice: driven operating insights. That's like every smart building, startups, websites, ever.

[00:14:13] Joe Aamidor: So I think what it gets to me is you really need to have a solid value proposition, and you need to be able to demonstrate your value. Not just generally speaking, this is what we can do for you. But more specifically, like these are examples of buildings. It's not just one. It's not just three, it's many buildings across many different clients.

This is what we're able to do and this is how we quantify it. And e even I think especially in this environment, Jeanneie might have some feedback walking through that with your potential customer before you actually have won the business to say, you know, you know, this is, this is, this is our value prop.

This is how it applies to you. Um, historically, the last thing I'll note on here, you have a lot of companies in smart building say, oh, we can save you energy. And on one hand that's true and a lot of them did save energy, but it also makes everyone sound pretty similar, right? Oh, [00:15:00] you're just a company that helps me save energy.

And a lot of the other savings or value from the software was a little harder to put your finger on and maybe for good reason. I mean, you meter your energy, so you get a bill every month. In terms of like staff time, you don't really have like a meter that tells you, oh, this is how many hours my facilities team actually worked.

uh, and, and what were they doing? I mean, they're, they're working, but were they spending their time finding data to do something? Or were they actually like fixing something or identifying a problem? It's just, uh, it's a lot harder. So I understand why everyone leaned on the energy piece, but you could argue that might not be enough.

One, because a lot of companies can help you save some energy. Uh, and, and I think dovetailing it to this one, it's just there's more skepticism out there. And maybe part of it is just we've had product solutions now for a number of years. You know, show me, show me the, the value, you know, not, don't just tell me, oh, most likely you can save money, so,

[00:15:56] Jeanne Casey: And I'll, I'll add one important thing I think to that, [00:16:00] which I really agree with all of that, Joe, but from the owner's perspective, there's also a lot more understanding and nuanced thinking on the owner's side of, okay, you helped me save energy five years ago. I don't think we fully understood what it would take, and we are now.

At least on, not that we've solved it all whatsoever, but we're on that journey and we've mapped out that journey and we've gotten, you know, key constituents across within a real estate organization on that journey, tied it to their own, you know, day jobs in a much more robust way than two or three or five years ago.

So, uh, uh, you know, for a new tech company or a startup to approach a real estate firm and just say, we're gonna help you save energy, the questions back from a potential user of that solution are going to be much more pointed and specific. And I mean, that's a really great thing for the industry and also for decarbonization overall.[00:17:00]

Um, and it'll

[00:17:00] James Dice: gonna help you save.

[00:17:02] Jeanne Casey: in that

[00:17:02] James Dice: the, the energy piece, the point that Joe is trying to make too is that that value prop is the least fluffy. The other ones out there, we're gonna, you know, improve your operating efficiency. All those things are even more fluffy or, or less tangible. And this is the piece that we, I, I feel like we, in our course, nexus foundations, we, and, and Jeanne, I think you've been in the course, I think we, we trigger people a little bit with the amount of work that we tell them they need to do here.

And, and I think it's for good reason. Like I stand behind telling people how much work this is, which is, what are all the costs to your technology product. When I buy it, it's not just the SASS fee. What are all of the costs that I need to budget for and plan for? And then what are exactly, and, and that's, we have a slide, and I think there's like nine different light items on this slide.

So it's probably more than a lot of people are thinking about when they claim what [00:18:00] their ROI is. The other piece of roi, right, is the benefits. So what are all the ways in which you're helping me do my business thing, whatever real estate organization this is, right? And I don't think a lot of startups go through the enough work to really map those costs and benefits to the financial models of the real estate organizations.

And it's a, it's a lot of work and it's hard work to get there, but it, especially in a time like this, it has to be done.

[00:18:28] Jeanne Casey: Fully agree.

[00:18:30] Joe Aamidor: The other one I was gonna add as you were speaking, James, the energy piece, we all probably remember, I think it was JLL that did the 3 30, 300 and the whole kind of framework there was, you spend three bucks a square foot a year on energy. You spend 30 bucks a square foot on your property and you spend 300 bucks on your people. So there is a lot of opportunity to deliver value propositions beyond energy, especially in smart buildings. I think the firms that are able to say, Hey, we actually [00:19:00] can very confidently show you examples of us doing that. You know, that can either be, uh, your, your, your staff are just much more productive using our solution.

And here's how I think they'll, they're now in a position to, to maybe be even more successful because that's more what people are going to be buyers are going to be looking for. Right? I, I, I'm more cognizant of spend, I'm trying to be a little bit more conscientious of what I'm spending my money on. I'm having maybe more trouble getting things approved so I, you know, instead of picking good enough technology, you're looking for the technology that's, you know, at the cream of the crop.

[00:19:36] James Dice: So this is a funny, I think, I don't want to go down this rabbit hole, but this is actually a funny topic to talk about. So the 3 3300 rule is the exact example. where I feel like startups kind of piggyback on top of that rule of thumb. And then they'll say, okay, you're spending 300 on people, or you're spending 30 on space and we're gonna help you save 5% of that, or whatever.

And that directly leads into their [00:20:00] ROI calculation. But they haven't sat here and asked, okay, who's spending that 30 cents? Or who's spending that $3 a square foot? Um, is it the tenant or the landlord? And is, and is who's spending, uh, the 300? Is that the tenant organization or the landlord? And, and how is the landlord thinking about this building?

Or is it a transactional building where they're gonna sell it in a couple years? We aren't going through enough work to figure out exactly how

[00:20:29] Joe Aamidor: Yeah.

[00:20:30] James Dice: and who is what I'm saying.

[00:20:32] Jeanne Casey: Totally. Or is it the owner of the operator because that's not always the same thing, or it's more often.

[00:20:38] James Dice: And every building, for the most part is different. . Um, and so we as technology vendors, I'm saying the royal, we, we have to go through that work to figure that out. Right.

[00:20:50] Joe Aamidor: Agreed. Yeah. Yeah. No, good, good points. Yep.

[00:20:53] James Dice: last thing before we get to like what's happened in m and a in the last quarter is [00:21:00] just broadly thinking about this being our first podcast of 2023. What are, what are your guys thoughts on, um, predictions? Maybe, Joe, you had some good stuff in your latest newsletter. Do you wanna

[00:21:10] Joe Aamidor: Yeah. Yeah. I, I, I won't go into all the detail in the interest of time, but yeah. In my most recent newsletter, which came out a couple weeks back, early February, uh, I just had my own couple predictions for the, for the new year and. I, I'll just maybe run through the four that I included in, and you could argue, I think this will be an interesting year in that we have a little bit of stress on the market side.

We have a need for PropTech, we have a need for smart building technology. We have interest in climate technology more so than we have historically, but you also have just potential stress within real estate assets. And there's been some news, uh, of, of just, you know, owners of properties defaulting on those properties or planning to default on those property.

So, you know, still a lot of data about offices are not empty, but they're not as full as they once were. So there's a lot of these pieces all coming together. I think if we zoom more closely [00:22:00] to just what does it mean for smart buildings in, in no particular order, the, the predictions that I had won, I, I do think we're going to have some rationalization in this marketplace more than we have right now.

And there was a graphic I shared where if you map out types of solution, uh, you map out use cases, you know, do you help me with e sg reporting? Do you help me with I A Q monitoring? I mean, you could argue there's. dozens, if not more use cases right now. There. There's very much a lot of overlap between vendors that do some of these.

And while I think that will continue, it's not going to be the most logical organized market by the end of this year, I do think that we're going to have more rationalization there. Um, it'll, it'll be a little bit clearer. We're moving in that direction. That's partially because of m and a activity that I expect to continue to happen, but I also just think owners and operators of properties will probably be a little bit more aware of what are the solutions I need?

How do I want them to come together? What do I want to integrate? What can be separate? So I think that, that we're going to continue seeing that. And I had a couple [00:23:00] specific, uh, predictions in the newsletter on just categories and, and what I think will happen in, in the year.

[00:23:06] James Dice: you mean by rationalization? You mean here are the boundaries between these different categories? These companies fit in these categories, like those types of

[00:23:14] Joe Aamidor: e e, exactly. I, I think that, and I've talked. Folks that are deploying, you know, individuals at properties, at, at corporates or commercial real estate firms that say, you know, like, there's like 20 companies and they all overlap in certain ways, but not in other ways. And it's really confusing. And I think once you know this market, that's a little bit easier to get your head around.

But if you are just coming into the market as a buyer, it's very confusing. And I think I, I'm seeing signs, definitely a acquisitions that have already happened that we've talked about on this, this podcast, but also just I think some recognition that, that certain things are kind of naturally going to fit together.

Um, also I think some categories of technology. Might remain or become it, it may be more fair to say that's a bit of a niche. Certain buildings will want that, but it's not something that every building is going to want, you know, [00:24:00] access control. Every large building has an ACC access control system. They all have a building automation system.

Generally, if they're big enough, um, there are other categories of technology where you might argue it might be more, more obvious throughout this year. That's gonna be interesting in certain buildings, but not in a lot of other buildings. So all of those things will contribute to the fact that it, it'll be a little bit more, I use the term rationalization, but maybe organization or, or more, uh, it'll be easier to wrap your head around how all these pieces fit together.

[00:24:27] James Dice: Got it. And were those, were those all the predictions? I can't remember the third more.

[00:24:32] Joe Aamidor: No, no. I, I mean, I, I kind of touched on a few of them there. I think there's gonna be an increasing PACE of merger and acquisition activity as we discuss here. I think the one point I was going to add to that, cause a lot of people, you know, I, I, I've read a lot of the other. I don't know that things will move as quickly as we think, though.

There could be some catalyst that, you know, you see accelerating m and a activity and, and so while I don't know that by the end of 2023 there will have been this huge amount of m and a, it may extend a few more [00:25:00] years. You still have in smart building tech world, you know, of the companies that are smart building firms.

You still have a lot of companies that I think are probably not going to raise a lot more money. They're not growing a lot, but they're also not, they, they may be able to get to profitability or, you know, profitability enough that they can keep the lights on and that might lead them to say, uh, we don't need to sell or we want to sell at our price.

So I think it just extends the clock. Um, the fragmentation we have is a problem for buyers, but it also means if you've been able to securely close a couple of key accounts, that may be enough to keep keeping business, um, exactly what happens with those. It remains to be seen, but it may not lead to, we can't raise around, we just have to go sell our business.

There may be a third approach. Can we just, you know, cut our burn, reduce our burn, and, and kind of live to see another day? Um, and, and I think I'll, I'll, I'll leave it there. There were a couple other predictions, but, [00:26:00] um,

[00:26:00] James Dice: Yeah, we'll, we'll put a link to the newsletter as we usually do in the show notes. Uh, Jeanne, you got any, uh, I think you got a hot take rather than a prediction.

[00:26:09] Jeanne Casey: I've got one hot take that I've been, uh, thinking about recently and might cause me to lose a couple of friends after I say it out loud. Um, . But I, I kind of think the e s G fund is this year's spac. It's the new spac. Um, and what do I mean by that? Uh, I think suddenly I'm hearing or seeing announcements formally that everyone is raising, one has raised one or thinking about launching one.

Um, and there's some real opportunity, I think, obviously, especially with, uh, respect to decarbonization and the built world. So there's good reason to be thinking about these themes. Um, and there's also, you know, it's one of the areas that I think is still possible to raise, or at least less [00:27:00] friction to raise LP limited partner capital.

So raise a new fund strategy dedicated to something related to E S G. Lots of limited partners do want exposure to that. That being said, kind of like SPACs, you know, 18 to 24 months ago, I see already a mismatch of supply and demand here. I think there's way more dollars being raised or allocated to companies, um, in the quote unquote with quote unquote ESG themes.

Then there are great investment opportunities, so I wouldn't be totally surprised if in 12 or so months from now or, you know, it'll probably take a little bit longer to see all these funds if, if these funds actually do formally launch and make investments. But I, I. could see, you know, the e s G fund going somewhat of the way of the SPAC in that there's just too much supply, not enough quality demand.

Um, and I just [00:28:00] don't see, you know, very few of these capital allocators raising these strategies all of a sudden have this deep expertise in climate tech or decarbonization or other e s G, you know, adjacent markets. Um, and so I wonder if they really have a unique view, or they're just riding the wave when there's, you know, many fewer waves to be ridden this year than there was in previous years.

[00:28:29] James Dice: Totally. Does this Hot Take rec, um, apply to VC funds? Does it apply to, because there's like funds that are getting raised around a, um, acquiring assets that are some sort of ESG rated. Right? But then there's also funds that are like, we're gonna go out and deploy capital into actual projects that decarbonize like those types of funds.

Is this all three?

[00:28:53] Jeanne Casey: no, I'm really talking about VC funds. Like I think the VC game is so, [00:29:00] you know, is so much about very few bets on a very high volume at the top of the funnel. And when you apply further parameters, like every PropTech fund raising an e s G fund, you're just narrowing the, the pi, the, the funnel that you can really look at.

And I think it's gonna be really hard to achieve that many venture scale outcomes. That being said, I think there are more opportunities. outside of traditional, you know, software like venture capital dollars, um, with a smart view on, you know, either like an opco proco model or the appropriate kind, finding the appropriate kind of capital associated with the right kind of return, like risk return profile, um, to invest in things that aren't just like purely SaaS with an E S G theme.

Um, but instead [00:30:00] decarbonizing real assets. There's, there's real, I'm not as much of an expert in that area, so I can't, I'm not, I'm gonna hold back from commenting on what the supply and demand of capital is there. I'm much more confident saying there's a disequilibrium in the venture market, um, on decarbonization and like ESG themes.

But I do, I think there's probably more of an interesting, more interesting, um, ways to deploy capital when you're not looking at like pure venture capital. Um, in the like decarbonization slash es and I hate, like, interchangeably using the, the term ESG and decarbonization. It,

[00:30:40] James Dice: I did it to you. I'm sorry.

[00:30:42] Jeanne Casey: No, no. It's kind of where, where we are as a market right now.

[00:30:46] James Dice: All right, let's cut off the macro discussion, Joe, unless we have anything else to say there.

[00:30:51] Joe Aamidor: No, I was, one of the things Jeanne and I were, were mentioning, I think just o offhand a couple weeks ago, was that, you know, the, in, in some ways investors might be looking at [00:31:00] climate tech. E S G is having a really big tam. So if you're in PropTech today, you're investing, you're putting capital work in PropTech, you could make the case, well, the climate tech opportunity is even bigger, and that's a way to go raise more money.

[00:31:15] James Dice: Hmm.

[00:31:16] Joe Aamidor: Again, speculative, but, but I think that's also maybe driving the, the, uh, posture towards, or the trajectory towards climate tech and e sg to, to build on G'S point.

[00:31:27] James Dice: Totally. All right, let's get into m and a. So Joe, let's start. You got basically all, you know your list that we'll put in the show notes as well. It's got a list of all the deals that have happened. Do you just wanna kind of run through a summary?

[00:31:41] Jeanne Casey: Yes.

[00:31:42] Joe Aamidor: Yeah. I'll just, I'll just read the ones since we had our last podcast, and again, this is just on my website, it's free for anyone to view. Um, so Energy, well acquired, think Energy in kind of the retail electricity provider space for residential. So maybe not as much smart buildings, but still interesting, uh, insight, [00:32:00] which is a, uh, smart building platform, kinda energy management, operational management.

They bought a company called Soul Vista. Which is in Hospitality energy management. So kind of got them more into hospitality Hotels specifically. Uh, Blackstone acquired a share of Emerson's Climate Solutions business. Uh, that is primarily the components that go into hvac. So like Copeland compressors are probably the number one thing people know when they think of Emerson.

And if you look in a lot of, uh, uh, if you look in a lot of HVAC systems, you'll actually see like a blue compressor, and that is usually a Copeland compressor. So that, that was, um, the majority share has been bought by Blackstone. Uh, info Grid acquired Aqua Core info grid. I tend to think of them as a kinda a smart building platform or a, a single pane of glass solution.

They're based in, uh, Europe, but they operate, you know, here too. And the Aqua Core gave them, uh, we'll, we'll probably talk about this, but they gave them more of an energy management platform That's kinda a specific use case. Generally the, the [00:33:00] scope of what they do. Um, energy, energy, big re um, deregulated energy supplier.

So if, if you live in a state where you can select your energy supplier, Texas, great example, Illinois, another example, they bought Vivid Smart Home. Kind of interesting, I don't know that we'll talk about this one, but the utility, uh, an energy suppliers. There's been a lot of m and a over the past couple years where they've been trying to, I think, make their product stickier, right?

Because at the end of the day, if you're selling, uh, energy, that is a commodity by definition. And a lot of the, the churn in those deregulated markets is, is quite high. Um, so, so my sense is they're trying to, uh, get more stickiness outta their customers. Um, allegiance, which is an, an operating unit of Blackstone that's kind of been built together through a number of different acquisitions.

They bought Lord Green Solutions, which was very focused on sustainability data management for commercial real estate firms. Um, more consulting from what I had seen than, than software, but, Kind fits nicely with what they've done. Um, Dcon [00:34:00] Big, actually the biggest HVAC company they bought Ben Star. Ben Star did a few things, but primarily thermostats and kind of middle tier building or middle size building climate control.

They did have a, a cloud-based solution. Um, Daikin's been pretty acquisitive, big acquisitions over the past couple years. Um, so we'll talk about that one, I believe. Um, s and P Global, um, you know, s and p, uh, they bought a company called, uh, shades of Gray, which was, uh, built out of a, a European organization called Cicero.

Um, very much kinda in the sustainability data category. Um, sealed, which is a, they retrofit homes. They, they retrofit and they provide sealed because they improve ventilation or, uh, insulation, sorry, insulation. They bought a, a small tech platform called, , um, lessen bought SMS assist. That's very much kind of a CMMS type product that has a, a workplace component to, or a marketplace component to it as well.

So I have stores, I have [00:35:00] facilities. I'm looking for service providers. Anything from trash removal, snow removal, uh, leaf, you know, clearing leaves, landscaping, um, that's what SMS assist could provide. Um, back very kind of specific, but I like to cover these cuz they're interesting. Um, Roger's Building Solutions bought a HVAC controls contractor, slus and Paget.

Again, there's a lot of those rollups happening, a lot of just independent, uh, firms. We don't really get into that so much on this podcast. It's actually pretty interesting. Um, and then last one to share thus far, convene acquired in, in Europe et TC Venture or et TC venues. Um, which is another, uh, event space

[00:35:41] James Dice: So the first thing, like when I hear that list, I'm like, that's a lot. Considering I, I felt like the last quarter was pretty quiet. Right? Um, the last part of 2022, at least,

[00:35:54] Joe Aamidor: I, I

[00:35:55] James Dice: like there's actually a lot.

[00:35:57] Joe Aamidor: yeah, I sometimes run the numbers [00:36:00] on to quarter. Has there been more m and a? Has there been less or year to year? Has there been more or less? I think if you look from like 20 17, 20 18, 20 19 to now, there's definitely been more activity, more m and a activity. I'm less focused personally on quarter to quarter, cuz there are cases where you can delay when you announce a deal.

I also just think. Going into November, Thanksgiving, Christmas, new Year's, all the holidays in December, it's probably likely that some firms would say, Hey, let's announce this. At the beginning of the, the year that list that I went through is from end of last year through the first month, month and a half of this year.

Uh, and I think even this month there have been, you know, and by the time this published is published is probably even more that we, we could have added. Um,

[00:36:41] James Dice: despite the ones that you did say, there's a lot from the sort of residential energy, but there, there isn't like this, we're not seeing this like major consolidation in smart buildings or PropTech really. At least in that list,

[00:36:58] Joe Aamidor: And, and I would also argue that there's [00:37:00] not a, a thesis you can point to and say these are the five firms that are all putting this thesis to work. I would say that, yeah, on the independent integrators, service providers, there's just been for years private equity firms buying those up, rolling them together.

So that, I guess you could say is a thesis that's pretty. I think the one that I'm starting to see maybe a little bit is just within the sustainability data management category, there are companies that have a position there that are buying up other, other, uh, assets. I think we're gonna talk about that a little bit.

We've talked about that on podcasts before. But, but other than that, you're right. It, it's not like everyone's trying to build prototypical PropTech building or business that looks like X and they're all kind of taking their own way to get there. Um, maybe we see that, or, or may, maybe we don't.

[00:37:45] Jeanne Casey: I have a question for you guys. Um, or at least an observation. I'm curious if it resonates with either both of you. Um, I've been surprised to see what I'll call. More mergers than acquisitions by [00:38:00] large incumbents announced recently. It feels like, I mean, even if they're technically an acquisition of like a startup, buying a smaller startup, I am.

I've been, or it feels like I'm seeing more announcements of that kind of like combination strategy of startups versus the traditional like strategic sale to a large incumbent.

[00:38:22] James Dice: Like info grid and aqua core? Is that what you're saying? Like that as an

[00:38:27] Jeanne Casey: Like an example like that versus, um, you know, at JCI or a Siemens being more acquisitive.

[00:38:34] Joe Aamidor: Yeah,

[00:38:35] Jeanne Casey: Does that resonate or is that just,

[00:38:37] Joe Aamidor: I, yeah, I, I think it actually is happening. I, I, yeah, I hadn't thought of it exactly that way. I, I, I, my take from, from your point, Jeanne is one, there's just so many startups out there. When you really start digging into this market, you realize there's so many companies, and you could argue some of them aren't in terms of product that much different than something that you might already have at a jci, at a [00:39:00] Siemens, at any of these larger companies.

So they might look at some of these companies and. You know, we already do that to some degree. Maybe our go-to market is a little bit different. Uh, yes, they've built a business, but that doesn't really add from a product point of view a lot. Whereas two or three small startups or two might say, you know, if we come together that might help us extend our runway, that might help us be a little bit more compelling to a buyer.

Maybe we have some shared customers that already like both of us, and so you know, we're gonna do right by them and maybe be more entrenched in those businesses. Um,

[00:39:33] James Dice: And how much is the, are the fundraising cycles a part of this too? I wonder because like if we look at that example, Aqua Core had raised money several years ago, and they're probably in a position where they needed to raise while the market is kind of on a downturn, info grid had just raised a lot of money.

Right. So there's probably like some synergies there, just with the way that the market turned out for both of them. But I, I, I, you know, [00:40:00] I don't know if I have a real piece of insight for you there, Jeanne. Um, I, I do know that if you look at Joe's list, you know, back to the list on his website, Siemens has been extremely inquisitive.

JCI has been over the years, just maybe not in this quarter, sh name of Schneider, right. Um, Honeywell, et cetera.

[00:40:19] Joe Aamidor: yeah,

[00:40:20] Jeanne Casey: fair. I think we're not gonna have like statistically significant data for another 12 months cuz these deals take so long to actually handle, like the lead time is probably six to 12 months at least. Um, and then there's a delayed announcement that you guys, you know, potential.

[00:40:35] James Dice: let's dive into a few of these. Um, I'll kind of lead us into ones I think are the most interesting. Let's start with Daikin. Joe, for those people that don't know Daikin, you said largest hvac, um, con largest HVAC oem.

[00:40:50] Joe Aamidor: yeah. Background on Dcon Dicon, uh, based, headquartered in Japan. Have grown in kind their number, their, their first business was, was in vr, [00:41:00] rf, they call it vrv, variable, variable refrigerant flow. But Vrv, I think is variable refrigerant volume. But um, basically heat pump type type HVAC technology.

Very popular in Japan, spreading very popular in other parts of Asia. More popular in Europe now, becoming more popular in America. They have, um, they, they're maybe not as much of a household name in the us, but they own Goodman. Goodman is more residential. But if you drive around just a suburban neighborhood and you're actually, if you're a dork about it, like me, and you're looking at people's HVAC units and, um, uh, you'll see like a lot of them are Goodman because it's, it's very much reliable.

They're all built America. Um, and. You know, good value is kind of how I think of Goodman. They bought a couple years back, they bought McQuay. McQuay was a big chiller. I mean, not as big as train, not as big as JCI New York, but they were a chiller business. Now they call that the Dyken applied business. So Daikin is a significant player.

They did not rebrand Goodman. So Goodman is still Goodman. So maybe people, you know, who, who are listening just don't realize that's actually part of Daikin. Um, [00:42:00] but, but Daikin, in terms of just pure play HVAC company, very strong. Uh, not as strong on the control side. Uh, you know, VR RF systems don't te tend to have as mo as robust controls as, as you would if you have, you know, a chiller and air handlers and whatnot.

Um, but, but that's taken in a nutshell. Um, they're, they're a very big player. Um, and, and not just in Japan. That's just, you know, where they're headquartered and where they were founded.

[00:42:23] James Dice: Yeah. Yeah. And then this acquisition, so they, they acquired Van Star, which is a controls company,

[00:42:29] Joe Aamidor: Yeah.

[00:42:30] James Dice: building sort of controls. We'll talk about sort of my take in a second, but this is similar to a bunch of other acquisitions on your list. Do you wanna kind of run through those?

[00:42:39] Joe Aamidor: Yeah. Um, you know, over time all of the big OEMs, not all many of the big OEMs have bought a business to get into the smaller building or mid-size building control space. So Honeywell back, I think 15 plus years ago now by Nova, there were a couple different businesses with [00:43:00] Nova. Um, but Novar had, if, if you go into a big box store, sometimes you'll just look at the thermostats and they're actually Nova thermostats if, if they're old Siemens bought site controls, same type of of business.

Um, they recently bought wat sense in, in between there they bought J two Innovations. Um, but those were all, uh, companies that were focused on the buildings that wouldn't buy a full-blown building automation system. A, a big bo you know, you go into a Best Buy, they're probably not gonna buy a building automation system.

They have rooftops, they have ther. But they might want some supervisory control. They might want some visibility, they might want to be able to look outside of that building. How are, how are things running in that building? Um, JCI has launched something called Verus, uh, that is their kinda mid building or multi-site type building control system.

Um, and then you have larger firms. Grid Point has raised, raised maybe a year ago, a big round. So that's an interesting category. And Vent Star was playing in that space as well. They have a thermostat product, uh, actual physical thermostats. [00:44:00] They, they work well in that middle-sized building. Uh, they have a, a cloud-based kind of reporting and, and visibility solution.

So they fit into that same category. Um, and that allows Daikin to, to play in that space where a lot of their peers over the years have moved into.

[00:44:14] James Dice: Yeah, totally. I, I think I have two thoughts here and I think it speaks to a couple different things. One is the control system allows, you know, Daikin's primary customer, which is system integrators and HVAC contractors, right? It allows those companies to perform service remotely. It allows those companies to, you know, have service contracts and, you know, stick with the same line of products that they might buy from Daikin usually.

Right? Um, the other piece of this is, I saw someone on LinkedIn the other day that said, um, it was actually a comment on one of my posts, but it was from someone like a VC from outside the industry. And he said something along the lines of like, I'm not worried about decarbonizing buildings because we're just gonna electrify the grid.

[00:45:00] And I think that is a. like a, an ill-informed take because if we were to take every, you know, and I think this shows kind of what Daikin's thinking, which is it's not just about selling heat pumps everywhere to decarbonize. It's also about, hey, we also need control systems to make those heat pumps do stuff better.

Right. Um, and even if we had heat pumps everywhere, we would still waste energy without the controls that go along with them. Right. It's not just about that piece of decarbonization. Um, and we have a whole white paper on this, you know, the importance of controls in small buildings where there currently aren't any.

But Joe, what, what do you think? Is that kind of how you're thinking about it as well?

[00:45:43] Joe Aamidor: Yeah. I, I, I think so. Um, the, the added layer to that, uh, even with heat pumps, even with electrification, demand flexibility, which is something we don't talk about a lot, that's a really big issue, right? Being able to use energy at the right times, being able to, [00:46:00] uh, pull, pull back on, or, uh, roll back what you're using at certain times, um, you really need controls to do that.

Um, and that becomes increasingly important as you have more variability in terms of generation of energy on the grid.

[00:46:13] James Dice: Yeah, so it's not just demand response, it's also controlling ventilation and making sure the heat pump's not, you know, conditioning a space that it's unoccupied, those types of

[00:46:22] Joe Aamidor: Exactly. Exactly.

[00:46:23] James Dice: super interesting. I, I hope we see in that category of acquisitions, I hope we see more investment and make, continuing to make controls for small buildings simpler and easier to use.

Kind of all the things we sort of outlined in our, our white paper. Okay, cool. That one's interesting. Let's go to the Blackstone one, Joe. So I'm not sure I, I, I see. , why this is interesting to you. So I want to kind of go into it a little bit. So you talked about Allegiance, which is a Blackstone company acquiring Lord Green.

Why? Why is this cool

[00:46:56] Joe Aamidor: yeah. No, uh, well, so, so one, [00:47:00] I think, you know, Blackstone, very sophisticated investor. They've made a number of acquisitions. They've kind of brought them all together. Brand they now call Allegiance. Uh, their website's actually pretty useful cause it just lists, these are all of our businesses and it, it summarizes them and explains them.

One of the businesses they had bought was a, a company called Re Tech Advisors. And I, I think that was a couple years back, um, maybe even before they, they called this grouping of businesses Allegiance. Um, but it's, it's very much playing in the same space as Lord Green in the sustainability data management and reporting space.

So when we talk about climate tech earlier, uh, when you own a lot of real estate, one of the, from a, from a sustainability point of view, one of the big roles you have is reporting out to, uh, or, or adhering to the various standards. Um, GRESB sa, sabe, uh, energy Star, there, there, I mean, there's a list of probably 15 to 20.

So you're, you're doing that and a lot of that is expectations from the people who have invested in your funds. So the investors of your funds [00:48:00] say, well, we wanna know like what, you know, we, we want all these details. So you have solutions that do that. Um, which can include a software solution to collect the data, to analyze the data software to help you report, but there's usually in there a consulting component to help, you know, pull together not just the quantitative metrics, but also the qualitative side of, you know, you, you, you, I think in GREs, GRESB specifically, you have kind of a narrative around, this is our strategy, these are our goals, this is what we have done thus far.

Um, so you, you can have that help. And then there's also things like, uh, data validation, da data completeness, that having just a software solution may help you do some of that, but they may be useful to have a human element. Um, I think what's specifically interesting about Blackstone is that the businesses they have acquired kind of go across the board, both from re tech and uh, and Lord Green with consulting to actually report every. Various sustainability standards, but they bought a company called Therma. Therma was actually a, a [00:49:00] contracting business that would actually go in and retrofit buildings, or can, I shouldn't say, did they, they still do retrofit buildings. So, and, and there's other businesses in there that, that they own that not just help with data management and reporting, but actually what I would call kind of cl or say close the loop on, we can actually help you improve your buildings.

Now that obviously is a huge market. A lot of it's very localized. Um, so I don't know that Blackstone's gonna be knocking on every door across the country anytime soon saying, Hey, we can do everything on end. But of the pieces they've acquired, they do that. Lord Green looked a lot like re tech advisors.

Um, I had been, I, I had heard, you know, they're, they're fairly similar, fairly competitive. There's a few companies out there that kinda have that role of, if you're a large commercial real estate firm, a large corporation, and you just need help figuring out sustainability reporting, there's kind of a, a short list of companies you'd go to.

And these were, were typically two of them. It would be on that list. So I don't know exactly what, what, what's being thought other than this might just give you more scale. There might be more consulting bandwidth, horsepower there that, that, that, that you can use. But I think it's interesting [00:50:00] because one, you're seeing sustainability, data management, sustainability as a strategy or a strategic imperative driving a lot of investment on the part of real estate companies.

And then here's a, a big business that's buying up smaller businesses that also has more of an end to end solution, I would say, than others.

[00:50:18] James Dice: Got it. Jeanne, you got any? You got any thoughts on this? This one?

[00:50:21] Jeanne Casey: Oh man. Um, this was a lot of learning in real time for me, honestly. Um, but it is interesting to see, I mean, this is much more of like a private equity strategy, so it's interesting to see the parallels or at least draw the, the comparison to, you know, startups and in the venture market trying to become or own more of.

Uh, you know, a, a journey, a user journey or like a full suite or a, a platform like solution. This is kind of the private equity equivalent. I, I think, um,

again, I, kind of.

[00:50:59] James Dice: a lot of people are [00:51:00] saying that that's gonna happen. Yeah. Yeah. I think a lot of people are saying that that's gonna happen to smart buildings. Right? That this kind of what you just described, Joe, from this reporting, you know, these reporting use cases. Yeah.

[00:51:13] Joe Aamidor: yeah. I mean, I, I, I, well, I think one private equity, I would not be surprised if they play a bigger role in everything worth we're talking about today. Smart buildings. Um, but, uh, but, but yeah, I also think, you know, the reporting piece is kind of a nice anchor in some ways. I don't know that Blackstone would say that's the anchor that we have for our entire end-to-end legions business, but it does make a pretty nice anchor.

[00:51:36] James Dice: Got it. And, and you mentioned that in a similar category here, there was another acquisition, which is Graz acquiring asset resolution.

you wanna talk about that a little?

[00:51:46] Joe Aamidor: yeah, I'll talk about very briefly. So GRE, I mentioned them, so, so if you are a real estate investor, a REIT basically, so Nuveen would be an example. You are most likely reporting to GRE every year. It's one of the leading standards, [00:52:00] uh, which is kind of validating, verifying performance around it's, it stands for the Global Real Estate Sustainability Benchmark.

Um, and there's others that are, are like them right now. The process typically works, either you submit data every year to GRE or you work through a consultant, or you work through a software solution, or maybe it's both software Plus. So, um, there's a whole ecosystem, uh, and, and again, GRE is not the only one, uh, standard that people are reporting to, but you could argue they've established themselves as being one of the leading standards for, for, again, mostly for commercial real estate firms, maybe not as much for a corporation that just has real estate.

Um, asset resolution is kinda an interesting data play. I see them as being maybe data. Both about individual assets, whereas GREs is typically more focused on a portfolio. Um, and there's a bit of a component there where they're, they're kind of market facing, right? So if you are investing in real estate businesses or real estate assets, you, there, there's the market for that.

And you may be using, you know, sustainability type data. Um, but I, I, I see it as just [00:53:00] generally being, uh, getting deeper into going downstream to some degree where GREs sits today. Um, I would also say that there's, you know, some, some overlap between what different companies do. So it's kind of also an interesting fragmented space.

On one hand we're seeing acquisitions, but you could also argue that there, there remains this, this fragmentation. Um, but it, but it, it is again, another kinda sustainability data management driven deal.

[00:53:28] James Dice: Okay, let's move on to info grade. We, we talked about it a little bit, acquiring Aqua Core. Um, you want to kind of explain how you see this one, Joe? And then I have some thoughts as well.

[00:53:41] Joe Aamidor: Yeah, yeah, sure. Um, I think our listeners may be more familiar with Aqua Core than with Info Grid, though,

[00:53:47] James Dice: They've both been on the podcast before,

[00:53:50] Joe Aamidor: yeah, they've both been on podcast, so I guess everyone actually, uh, should know both. Um, so Info Grid based in London, uh, ACORE is based in the DC area. Um, info Grid [00:54:00] operates in the US as well.

I'm actually not sure if Aqua Core operates outside of America, but info grid has kinda established itself as, as one of these, as I mentioned earlier, kinda a smart building, uh, uh, operating system. You could argue data across multiple different use cases, multiple types of data, multiple data streams.

Historically, those companies are useful in that you don't have to have 10 different places to find 10 different data streams. You can go to one place, though in reality. There's still a lot of silo data in a lot of buildings or across a lot of portfolios. So there's kind of, there's a process you have to go through to get everything onto one system if you really want to get onto one system.

And I, I, I, you know, that's more of a multi-year journey than, than we buy a software solution when we all of a sudden everything's in one place. But they, they, they were across the board doing a lot, a lot of different data types, you could say, could be managed in their solution. Um, Aqua Core, very focused, you know, starting on energy management.

That kinda includes to some degree sustainability, data management. [00:55:00] Um, but they look a lot like a lot of the other interval data. I mean, historically, a lot of the interval data solutions, right, where we put meters in your buildings, we collect those data. It's 15 minute interval. It tells us all kinds of interesting things about what's happening in your building, easy to identify, a lot of inefficiencies, so on and so forth.

If you have all of that information, you can easily convert it into carbon emissions and have a sustainability story as well. So, so these two companies coming together, it definitely gives info grid a lot more depth around energy management. You could argue energy and sustainability management. Um, which to our point earlier is where you have a solid, uh, value proposition, solid roi, right?

Energy and, and, and, uh, energy savings. So those two companies coming together, you, you could argue it does make info grid, which based in the UK more of a player in the us. Um, obviously the US is a huge market and, and it's, uh, in a lot of ways fairly similar across the country, whereas you could say in Europe, each country is a little bit different.

Um, so it it's easier to, to scale, I would say in [00:56:00] the us Yeah.

[00:56:00] James Dice: I think one of the interesting things about this acquisition is like you have a company info grid that doesn't currently do, to my knowledge, right? Everything changes, you know, faster than I can, uh, you know, hear about it sometimes, but you have info grid who doesn't currently do integration with onsite systems.

It's typically, you know, slap a cheap sensor, not cheap, right? Slap a low cost sensor into the building and create data that we didn't have before, and then provides some sort of software experience that. Help someone do their job better. Right. Totally needed. But interesting that they're not coming in and saying, we're gonna integrate with your automation systems.

We're gonna integrate with access control. They're sitting out as its own new silo usually. Right. They make an acquisition of a company that also does that. Right. Where we're coming in and putting meters in, we're coming in and, and you know, they're basically at the energy silo, like you said. Um, I'm not trying to offend anyone by saying silo, but just like they do that as a point solution.

Right. [00:57:00] Um, so it's interesting now we have the combination of the two, but we still don't have, uh, legacy systems integrated into that solution. And I feel like there's a limitation there that is still, you know, you know, it's a new stack, new use cases, new ip, but it still feels like there's a lot that needs to be added to that solution to be comprehensive in the way that we're talking about these roll-ups happening in the industry.

[00:57:26] Joe Aamidor: Yeah. And, and I think that's for a variety of reasons. One, it's just very difficult at scale to integrate with a lot of the on-premise systems. Um, there are solutions now that kind of solve that specific piece. but it remains tough and it's different in every building. So it, it's not a repeatable process like you would, you would want if, if you're deploying your own, your, your own, um, software.

But, but I also think there may be some hesitancy on the part of a building owner, well really facility operator, building operator, I might say, you know, I don't really want anything touching my building automation system. I want information and then I'll [00:58:00] go to my building automation system and, you know, change schedules, setpoint sequences, things like that.

I think that might change a little bit. One, because we just have a shortage of labor. So if you're looking to augment, um, individuals with software, one way to do that is to, to, you know, take some of the things you're doing as a job and saying, can we just automate that piece? So I'm still involved. Um, so I'll, I'll stop there.

Yeah.

[00:58:23] James Dice: The other piece of this, and I think you would agree with me, Joe, here, is that in that space that Aqua core was in, which is I'm gonna do cool stuff with utility bills and I'm gonna do cool stuff with interval meters. That sort of energy management information system space, energy information system, that space is unique in that the software products are not that differentiated in that category.

There's a bunch of them, right? And they're typically catering to the user persona that's the energy manager, the very technical engineer like I used to do, you know, in the first 10 mi 10 years of my career. And [00:59:00] it's really difficult because there aren't that many of those folks out there, and a lot of owners don't have those people on staff.

And so I, I think there's a, a difficult, like that category has difficulty jumping over to adjacent user personas. How do I get into. The sustainability manager, how do I get into the e s G person? Right, at the real estate organization? Well, you're gonna have to help them with what their problems are, right?

You're not helping the energy manager, you're helping that other person. Um, the other direction, right, is the facility managers. It's really difficult to go from, I have meter data to, I'm helping a facility manager with their job, right? And I, I think if I, and I haven't heard, I haven't talked to Logan in a few years from Aqua Core, but if I had to like say what the problem is with that business and why they aren't, you know, why aren't they not the ones acquiring info grid?

It's, it's like, it's because that jump to adjacent stakeholders and user engagement is actually a [01:00:00] really, really difficult one to make.

[01:00:02] Jeanne Casey: I think that's

a really, really great point. Yeah. I was just gonna, uh, you know, kind of related to that, I think it's easier, and I can't think of an example off the top of my head. I'm curious if either of you can, but it's, it's easier to move, um, top down than it is bottom up. And what I mean by that is like top down from the actual like largest budgets, which will usually come from owners and then probably operators and then probably facility managers and like folks actually like boots on the ground.

I think it's easier to start up there even though, you know, from like a, a portfolio view where you're, you're maybe not actually like ha you, you don't have as much measurable impact, um, but you're speaking to the people who have the largest purse strings. So I'm cur do you guys have, you know, off the top of your heads examples of companies [01:01:00] who have successfully gone in that direction versus what I think you're kinda describing in the friction that, um, you know, these folks have

potentially run

up against is going bottom up is much harder.

[01:01:12] James Dice: totally. Well, Joe and in Joe's newsletter, he kind of has a couple graphics that I think speak really well to this, which is like, top down is like you had a Freudian slip there, gene, which is measurable, right? Measurable has done a good job of starting at the top. I think, I think Aqua Core was sitting in the middle, which is like a more technical user, more, uh, metering required to enable what they were building.

And then you have like, uh, an F d D product or a, a deeper analytical product that it's all the way on the right, which is like, I'm gonna cater to a technician or a facility manager. You have that spectrum here, and you're right, I think Measurable is a good example of like starting on that full left side and going, you know,

off use cases.

Um, we said we weren't gonna talk about Measurable this time, though. Maybe there's another example.

[01:01:59] Joe Aamidor: [01:02:00] Uh, well, I, no, I agree with everything to build on all of that. So Gene, I think you're right. Um, the budget piece is, I think, critical also, just from a strategy point of view. If you go to the top of the organization and say, we want to deploy a solution that can help you solve this big hairy problem issue, which is sustainability, uh, broadly getting to net zero broadly, and that, yeah, the form that takes is we need to track these metrics and we need to report out on these metrics.

That's something that you can kind of get the, the whole organization. To buy in on. If you look at solutions that are more interval data focused, oftentimes you have individual facility teams. Maybe you have separate operating third party operators across your portfolios who might say, well, you know, we have good experience using this meter, this metering, uh, meter reporting technology, interval data technology we're using that it works well, and all the metrics you need to do the sustainability reporting.

We can, we can send them to you. We can, you know, do that through an api. We can just report, you know, send you a spreadsheet, whatever it is. Um, so I think each of those solutions has [01:03:00] kind of carved out a niche, but it's, if you're trying to scale across an organization, which all these companies are trying to do, starting at the, we have the, the strategic solution for the entire portfolio for sustainability data management, it's easier to start there and then go down.

Um, now the other side of. That I think has not really been resolved. When you look at how do we actually get to net zero, like how do we actually hit the 2035, you know, let's say target, A lot of that requires some real detailed data about those individual assets. So you may, you know, at at, at the portfolio level, say we know how our builders are performing.

We have all our energy star scores. We see they're getting better. But that doesn't, that just continuing on is kinda incremental improvement where what we probably need is more, uh, you know, more significant improvements. And some of that is going to require much more intimate knowledge of what's happening in individual buildings, connecting to the systems, pulling data outta the systems.

Uh, that's, I think what all these companies are are seeing. It's gonna be a little [01:04:00] messy, I think, getting there

because you just have so many different companies. You have a lot of legacy software, you have a lot of newer software that don't necessarily completely integrate.

[01:04:08] Jeanne Casey: well and also a sales

motion that hasn't targeted that decision decision maker or that

[01:04:16] Joe Aamidor: Yep.

[01:04:17] Jeanne Casey: before. Sorry. Go ahead, James.

[01:04:19] James Dice: yeah, it's, it's sales motion, but it's also like there's a gap here and I call it the portfolio site gap, which is like decarbonizing happens in a mechanical room, right? It doesn't happen at the portfolio level, right? So top down only has a certain amount of power and you ha, I think it's a product thing and a business model and a sales motion, right?

Where I have to. Well, what is, what do I have to do to get into the facility management processes and operations, right? Um, because it's capital upgrades, right? And that might be the facility manager, it might be the property manager, it might be someone's portfolio. We have to integrate decarbonization into the, [01:05:00] into the capital upgrades.

It's, uh, maintenance, right? It's,

[01:05:03] Joe Aamidor: Mm-hmm. . Mm-hmm.

[01:05:05] James Dice: it in with how they do things, right? So it's, it's that gap and it's that, like you're saying, I have to get and spread throughout the organization. And I think the, the companies that are gonna win isn't, isn't necessarily top-down, but it's somebody who can engage from wherever they started and move from one to the next, right?

[01:05:25] Jeanne Casey: I like the way of of that. You just frame that up. Yeah.

[01:05:30] James Dice: Let's call it. I think this is a good, good discussion. Um, we have a bunch of on our list that we intend to get to at some point that I think will be interesting, but let's call it for this quarter. Let's close out with some, uh, carve outs. Any, um, books, TV shows, podcasts, et cetera, that have had a, a big impact on you guys lately?

[01:05:53] Jeanne Casey: I just, I'm a little behind on this one cause it's not like a new book, but I just read the Gold Finch by Donna [01:06:00] Tart and really enjoyed it. Um, I think that there's a poorly scored Rotten Tomatoes movie also of that story, but the book was fantastic. I can't vouch for the movie though.

[01:06:15] James Dice: And this is fiction.

[01:06:17] Jeanne Casey: it is fiction. You know, six or last summer I discovered I used to only read like, um, business or like non-fiction books cuz I'm a dork.

Um, and I discovered that I like reading stories. So that, yeah, that's one of my recent fiction reads,

[01:06:34] Joe Aamidor: On that note, I was at, I was at our library this week. I was just kind of browsing. I had to drop some books off that were overdue, but luckily, uh, not that overdue. And, and I was just, I usually just go up to where all the, the fiction or non-fiction books are in our library. There's two floors and I was like looking around for fiction books, so I was like, oh, maybe I'll try a fiction.

And I asked the librarian, I said, where are the fiction books? She's like, oh, they're downstairs, sir. Said, oh, yeah, yeah. I've never actually checked out a fiction [01:07:00] book from our library, so I wouldn't know that. And sure enough I found them and uh, and then she's like, you know, they're the way they're organized.

I'm like, okay, okay. I think I, I, I think I can find, find, figure it out. But it, I mean, the librarian was very nice, but it was just like funny. It was assigned to me. Like, I guess I don't get a lot of fiction books. Um, in terms of carve outs, I mean, can I, can I say the World Cup as a carve out? Is that, I guess James, that, that

it's a little old, but it was pretty good.

Uh, pretty

exciting

[01:07:25] James Dice: that happened. Yeah.

[01:07:26] Joe Aamidor: I know. I, it's like, it's such a weird timing, right. Um, but uh, I also, I'll say, uh, I just, I think after the World Cup, I don't know it had anything to do with the World Cup. Finally started getting into Ted Lasso, which is kinda incredible. Cause I think it's been out for a number of years.

I played soccer, love soccer. My mom is English. I have family in England. So like you, that should have been like the first show I would ever watch. Somehow we just never started watching it. And, and I guess just yesterday, I think they announced the third seasons coming out next month. So,

[01:07:55] Jeanne Casey: I was gonna say that's amazing timing cuz now you're gonna be able to power through [01:08:00] all three and it'll just be fantastic.

[01:08:02] Joe Aamidor: The, the one thing, not to pick on my wife, but in, in talking through shows where there's English speaking English accents, she wants remark to me that sometimes it's hard for her to understand English accents. And I think certain speakers in England have very deep, like, you know, the, the FS and the ths kind of all melt together.

And I, I don't have that I issue cause I just, I, there's been enough native English speakers, but I think for a while it's like, I don't know if I wanna, like, I can't figure out what they're saying. And so, um, but, but anyway, we, we've gotten through it and or started getting through it.

[01:08:36] James Dice: So my carve out is related. So I heard, um, Brene Brown interview, um, coach Lasso and Beard, which is, uh,

[01:08:46] Joe Aamidor: Mm-hmm.

[01:08:48] James Dice: uh, what's his name? It doesn't matter. Brendan Hunt. And obviously Jason Sudeikis and she is, is such a good interview. Somebody sent it to me and it sent me down this like Brene brown rabbit hole.

And so [01:09:00] my carve out is gonna be her latest book, Atlas of the Heart, which is really, really good. It's like going deep into the fact that they're actually like 87 different emotions. and humans, most humans in our culture have a very small emotional vocabulary. It's like three emotions, happy, sad, and mad , right?

But they're actually 87 of them, and I think we could all do a better job of like actually refining our vocabulary a little bit there. So Atlas of the Heart, it's a really good book. Um, but also that podcast where Brene Brown interviews Ted Lasso and, and Brendan Hunt. So, uh, let's, let's call it, thanks so much for the two of you for coming on the show.

Again. We'll do, uh, volume five. Hopefully there's more. Hopefully there's more m and a to talk about in a couple months.

[01:09:48] Joe Aamidor: And if not, we have a list of the ones we haven't gotten to, right? So

[01:09:52] James Dice: Yeah, we could always recycle some. So anyway, thank you so much.

[01:09:56] Jeanne Casey: Thanks James.

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"Even with heat pumps and electrification, demand flexibility is a really big issue. You need controls to be able to use or roll back energy at the right times and that becomes increasingly important as you have more variability in terms of the generation of energy on the grid."

—Joe Aamidor

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

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

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

Episode 139 is a conversation with Joe Aamidor of Aamidor Consulting and Jeanne Casey of Nuveen. If you add me in, you get J³.

Summary

This is the fourth installment of our M&A Roundup series, recorded in February 2023 all about what's happening in the marketplace right now.

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

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

Mentions and Links

  1. Nuveen (1:18)
  2. Aamidor Consulting (0:40)
  3. Fred Wilson's Post: What Will Happen In 2023 (7:05)
  4. ChatGPT (8:40)
  5. Matthew Gottesdiener's Tweet (9:01)
  6. Nexus Labs Courses (17:22)
  7. 🎧 #058: Darlene Pope on JLL's 3-30-300 rule (18:37)
  8. Joe's Newsletter: Smart Building Insight (21:14)
  9. Joes's Smart Buildings M&A List (31:30)
  10. Energywell x Think Energy (31:50)
  11. Insite x Sol Vista (32:06)
  12. Blackstone x Emerson Climate Solutions (32:01)
  13. Copeland compressors (32:31)
  14. Infogrid x Aquicore (32:39)
  15. NRG x Vivint Smart Home (33:01)
  16. Legence (Blackstone) x LORD Green Solutions (33:41)
  17. Daikin x Venstar (33:59)
  18. S+P Global x Shades of Grey (CICERO) (34:19)
  19. Sealed x Inflsense (34:35)
  20. Lessen x SMS Assist (34:38)
  21. Rogers Building Solutions x Sluss+Padgett (35:17)
  22. Convene x etc.venues (35:30)
  23. Siemens x J2 Innovations (43:11)
  24. The Untapped 87% Whitepaper (45:34)
  25. Blackstone x Therma (48:58)
  26. GRESB x Asset Resolution (51:38)
  27. 🎧 #070: Will Cowell de Gruchy: Infogrid (53:47)
  28. 🎧 #018: Logan Soya: Aquicore (53:47)
  29. The Goldfinch by Donna Tartt (1:05:57)
  30. Ted Lasso (1:07:38)
  31. Atlas of the Heart by Brené Brown (1:08:39)
  32. Brené Brown: Ted Lasso (1:09:31)

You can find Joe and Jeanne on LinkedIn.

Enjoy!

Highlights

  • Jeanne's introduction (1:05)
  • Joe's introduction (1:52)
  • The economic environment that startups are in today (2:23)
  • What investors are actually looking for in a startup (8:55)
  • 2023 predictions and hot takes (20:55)
  • M&A trends in smart buildings (31:30)
  • Daikin x Venstar (40:38)
  • Legence (Blackstone) x LORD Green Solutions(46:41)
  • GRESB x Asset Resolution (51:38)
  • Infogrid x Aquicore (53:31)
  • Carveouts (1:05:44)

👋 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 (400 members and counting)

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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. 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 Dice: Hello and welcome to the Nexus podcast. It's so nice to have you two back. I have Gene Casey of Nuveen and Joe Amador of Amador Consulting back for the fourth edition of the J Cubed m and a podcast series. Is that what we're calling it? Um, let's start with some intros. For those of you that haven't caught up with our first three, and if you haven't caught up with our first three, there's no need to really go back cuz this is kind of about what's [00:01:00] happening right now in the marketplace.

So let's start with Jeanne. Can you introduce yourself? Talk about what, what you do.

[00:01:07] Jeanne Casey: Sure thing. Thank you so much for having me back, James. Uh, thrilled to be here. My name is Jeanne Casey and I'm the global head of PropTech and Innovation at Nuveen Real Estate. Um, for anyone not familiar with Nuveen, we are a very large asset manager. We're number four, number five, largest real estate owner in the world across all.

Um, sectors of real estate with about 150 billion, maybe 160 by now. Um, A U M I lead our venture capital investment program, so we're making direct investments into PropTech startups. Um, and I'm also head of innovation, so I serve as kind of the internal expert on all things, uh, startups and venture capital.

[00:01:50] James Dice: Awesome. Thank you. How about you, Joe?

[00:01:52] Joe Aamidor: Yeah. Thanks. Uh, thanks James. Good to be here with you and Jeanne. Uh, Joe Amador. I work in the smart building space, really product [00:02:00] market strategy consulting. So I work with small startups, large startups that need help in that product strategy realm. Competitive analysis, voice of customer market sizing. I do a lot of work with investors, usually diligence of specific deals, but sometimes other things.

And I do a little bit of work with owners and operators when they're looking for solutions to solve the smart building related problems that they might be.

[00:02:20] James Dice: Totally. Let's start with, we've done this, I think the last two episodes, um, in this series where we just talk about kind of the macro environment for startups in the smart buildings industry. Um, gene, you're our go-to and the analyst for this, for this topic. Do you want to kick us off what's going on in the, the marketplace right now?

[00:02:45] Jeanne Casey: Yeah, so at the risk of, you know, having a very similar conversation to the one we had three and now six months ago, um, things have slowed down. Um, I don't think that's news to anyone. [00:03:00] Um, but I think overall we've seen the, at least the beginning to kind of middle innings of a fairly healthy reset. Um, so if we're looking at the overall venture capital market, um, finding the market clearing price or, you know, the valuation of a.

Uh, that is raising a round of funding, whether it's a seed round, a series A round, a series B round, that process is taking a bit longer, um, than it did, you know, 12 months ago, 18, 24 months ago especially. So there's fewer term sheets, but rounds are still being raised. Um, there have also been, you know, I would think a broad set of expectations that have been reset both on the founders and the company side, as well as venture capital investors.

And that's really all around a foc, a greater focus on business fundamentals, [00:04:00] a path to profitability and controlling startups burn rates. So there is overall a greater expectation, um, and an onus placed on companies to demonstrate that they can achieve the same level, um, of commercial outcomes or achieve those KPIs.

Or milestones that they've aligned on with their investors with, uh, smaller amounts of funding. So really do more with less, I think is a tagline for the last three months. Um, again, not to repeat a lot of what we've talked about on the last couple of these episodes, but we have definitely seen valuations come down that's been most pronounced in later stage venture capital.

Um, but it is definitely true and has been felt and is being shown up now in kind of year end 2022 data across the board. Um, but again, more pronounced the [00:05:00] later year looking, um, that is maybe, uh, true across the board except in two key areas, uh, both of which have a lot of relevance to smart buildings in all of our smart buildings slash PropTech worlds.

And that is climate tech. Um, valuations have not cooled off as much as, you know, kind of more point SAS solutions, let's say. Uh, and the other one is anything to do with ai. And so that's, that seems to be the new buzzword. Um, I think there's a ton of promise and excitement ahead in both of those categories for sure.

But there's also a lot of writing, um, of tailwinds for any company that kind of, you know, loosely, uh, has a theme in one of those two areas. Um, and then I'll, I'll end by saying I think, you know, one indication that we've really turned a corner is that capital that was previously available to what I'll call like middle of the road startups, ones that are not absolutely [00:06:00] killing it, and converting pipeline customers to paying customers with real revenue.

Like growing that revenue really quickly. If you're not doing that, it's really hard to go back to your existing investors for what previously was fairly easily accessible. Bridge rounds or interim rounds, or we saw a lot the rise of like the seed prime or the seed extension or the a extension round that is much less common.

Um, at least what I'm seeing on the ground right now. So I'll say overall, um, slow down is, is not surprising to anyone, but this feels like a fairly healthy reset that we're still in, you know, ending two, three, maybe four. Um, so fairly early on still.

[00:06:47] James Dice: Got it. Super insightful. Joe. Joe, what are your thoughts?

[00:06:52] Joe Aamidor: Oh, I, well, you know, it's funny, when we were prepping for, for this discussion, we, we just, for everyone who's listening, we [00:07:00] just have some notes. We just throw ideas in there. We kind of. Caress that into a, an outline. But you know, Fred Wilson has, has a, a blog post, we don't have to talk through it here, but he noted one climate is the one area they're investing that's kind of been spared, I think is the term he used from some of the carnage.

I dunno if he used carnage. He definitely used spared. Um, so that aligns gene with what you're saying. Um, but I also think the point on AI is interesting just because on one hand, yes, it's a hot area, but there's a lot of data analysis techniques in smart buildings that I think over time have become, I, I remember when I was a product manager, we had just a, a statistical analysis tool to do measurement verification, right?

So validating the savings of an energy project and that kind of became, oh, let's call this machine learning. And then that became, oh, let's call this ai. So it's kind of a slippery slope as well of with the, that market being somewhat spared. More companies will say, oh, well this is actually ai when it's like, well, you know, it's like definitely like a data driven analysis [00:08:00] approach.

So it'd be interesting to see how all that plays out. I agree with you though, Jeanne. I just,

[00:08:04] James Dice: I think, yeah, it's a recipe for, for overhyping what we were already doing in, in the industry. I think it's funny because the, the first thing when the, when the rage started coming out about chat, G p T, the first thing I thought of was data modeling in the smart buildings industry. So you take data out of building and we're trying to figure out how to tag it with the right metadata tags, and there are, you know, very smart engineers out there that are doing that all the time.

That type of generative AI is perfect for that. But I think a lot of the companies that are out there building products around that use case, they're, they are, were already doing it before chat, g p t ca, like they were already doing it. So it's not like that

[00:08:44] Joe Aamidor: yeah, yeah, yeah, yeah.

[00:08:45] James Dice: of that product to the market really.

Really changed things a whole lot. Anyway, that's a rabbit hole. We don't have to go fully down today.

[00:08:54] Joe Aamidor: Yeah.

[00:08:55] James Dice: Um, one of the things I wanted to go back to real quick, [00:09:00] um, and this kind of relates to the Twitter thread that you brought up, Joe, in our sort of prep discussion, gene, you said something along the lines of, it's like sort of getting back more into business fundamentals, I think you said.

Can we just like really talk about what that means? Like what are the actual things that investors are looking for to come into the next round? Right. In a startup, it it's customers and it's traction and it's, uh, repeatedly being able to prove that you can find new customers. Right. Is that, is that kind of what we're talking about here?

[00:09:34] Jeanne Casey: directionally. Absolutely. I think where the nuance comes in is it totally depends on what round of funding and what stage of maturity company you're talking about. So for, you know, a pre-product company or a pre-revenue company or a company that just has like a beta or a very preliminary pilot, you know, those kind of key performance indicators or [00:10:00] KPIs look very, and the metrics that investors are looking.

Four, um, to invest and to find that market clearing price, I'm calling it. But really just like the valuation of that round, um, they're gonna look really different than a company raising a series B or a series C that has five or 10 or more million dollars of revenue from customers that have been, you know, customers for multiple years.

So now you have the ability to do a cohort analysis and understand churn of customers and the ability to upsell. Um, and so you can get into all the kind of metrics. Um, it also depends on business model. So are we talking about selling your software? Are we talking about tech enabled services? Are we talking about a marketplace where you can analyze a take rate and the ability to like uphold that take rate over time?

Or is there gonna. Price compression as you know, kind of, uh, marketplace grows [00:11:00] and those players can potentially transact off the marketplace if the, the clearing take rate is too high. Um, these are all kind of, you know, would be my follow-up questions. Um, but I'd say generally investors are always, and in early and mid-stage, um, venture capital investors are always looking for three things, or at least three buckets of things.

The first is a really strong team, and in then this environment that's arguably even more important because you want to be in backing folks that are really great fiduciaries of capital, meaning they're gonna be really prudent with their spend, they're gonna be really smart and hiring, um, and controlling that burn rate and achieving, making sure that they can do more with less, like what we were talking about up top.

um, and that they have the domain expertise. Do they have, if they're claiming they're an AI company, do they actually have, you know, AI engineering talent? Are they able to [00:12:00] produce the products that they're, you know, nice looking pitch decks, claim they can, um, two is traction. And so all of, you know, being able to actually convert, um, customers to two real dollars.

And so it's nice to be able to throw a bunch of like, pilot logos into a deck. But are those people paying you? How much are they paying you and are they paying you more over time? Um, or is that like a one-off little, just like test case, which is more common now in, again, in this environment to convert a pilot customer to like a, a th a full customer.

Um, and then I would say three, of course, the technology. Is this a differentiated product? Is it solving a real problem? Again, even more important in a, a macro environment like this, because customers are only gonna spend money on things that are solving real, real problems and helping their bottom line, which in the case of [00:13:00] PropTech in the real estate industry, is most often, you know, is it improving NOI at the end of the day, either today or overtime?

[00:13:08] James Dice: And that's where this Twitter, Twitter thread comes in, Joe, which we'll put in the show notes. I think this is super insightful because Gene, you just brought the perspective of what does, uh, startup need to prove to investors, but on the other side, they also have what do we need to prove to building owners, which is where this, and, and the expectations on both sides of them are ratcheting up right now, it seems like because of the macro environment in the real estate industry.

So, Joe, can you talk about this, this kind of Twitter thread and kind of what it goes into in terms of these expectations,

[00:13:41] Joe Aamidor: yeah. This is, uh, it's, it's from, and we'll, we'll share it, uh, Matthew Goddess Deaner. Um, and I'll just read one of the, I think it's the first or one of the, the tweets PropTech startups that charge per unit recurring SAS fees and promise, either an amorphous process efficiency improvement or worse data-driven operating [00:14:00] insights are going to have an incredibly hard time generating new business in 2023.

So, again,

[00:14:04] James Dice: love this.

[00:14:05] Joe Aamidor: Yeah. And the whole thing is good. Um, I'm not

[00:14:08] James Dice: driven operating insights. That's like every smart building, startups, websites, ever.

[00:14:13] Joe Aamidor: So I think what it gets to me is you really need to have a solid value proposition, and you need to be able to demonstrate your value. Not just generally speaking, this is what we can do for you. But more specifically, like these are examples of buildings. It's not just one. It's not just three, it's many buildings across many different clients.

This is what we're able to do and this is how we quantify it. And e even I think especially in this environment, Jeanneie might have some feedback walking through that with your potential customer before you actually have won the business to say, you know, you know, this is, this is, this is our value prop.

This is how it applies to you. Um, historically, the last thing I'll note on here, you have a lot of companies in smart building say, oh, we can save you energy. And on one hand that's true and a lot of them did save energy, but it also makes everyone sound pretty similar, right? Oh, [00:15:00] you're just a company that helps me save energy.

And a lot of the other savings or value from the software was a little harder to put your finger on and maybe for good reason. I mean, you meter your energy, so you get a bill every month. In terms of like staff time, you don't really have like a meter that tells you, oh, this is how many hours my facilities team actually worked.

uh, and, and what were they doing? I mean, they're, they're working, but were they spending their time finding data to do something? Or were they actually like fixing something or identifying a problem? It's just, uh, it's a lot harder. So I understand why everyone leaned on the energy piece, but you could argue that might not be enough.

One, because a lot of companies can help you save some energy. Uh, and, and I think dovetailing it to this one, it's just there's more skepticism out there. And maybe part of it is just we've had product solutions now for a number of years. You know, show me, show me the, the value, you know, not, don't just tell me, oh, most likely you can save money, so,

[00:15:56] Jeanne Casey: And I'll, I'll add one important thing I think to that, [00:16:00] which I really agree with all of that, Joe, but from the owner's perspective, there's also a lot more understanding and nuanced thinking on the owner's side of, okay, you helped me save energy five years ago. I don't think we fully understood what it would take, and we are now.

At least on, not that we've solved it all whatsoever, but we're on that journey and we've mapped out that journey and we've gotten, you know, key constituents across within a real estate organization on that journey, tied it to their own, you know, day jobs in a much more robust way than two or three or five years ago.

So, uh, uh, you know, for a new tech company or a startup to approach a real estate firm and just say, we're gonna help you save energy, the questions back from a potential user of that solution are going to be much more pointed and specific. And I mean, that's a really great thing for the industry and also for decarbonization overall.[00:17:00]

Um, and it'll

[00:17:00] James Dice: gonna help you save.

[00:17:02] Jeanne Casey: in that

[00:17:02] James Dice: the, the energy piece, the point that Joe is trying to make too is that that value prop is the least fluffy. The other ones out there, we're gonna, you know, improve your operating efficiency. All those things are even more fluffy or, or less tangible. And this is the piece that we, I, I feel like we, in our course, nexus foundations, we, and, and Jeanne, I think you've been in the course, I think we, we trigger people a little bit with the amount of work that we tell them they need to do here.

And, and I think it's for good reason. Like I stand behind telling people how much work this is, which is, what are all the costs to your technology product. When I buy it, it's not just the SASS fee. What are all of the costs that I need to budget for and plan for? And then what are exactly, and, and that's, we have a slide, and I think there's like nine different light items on this slide.

So it's probably more than a lot of people are thinking about when they claim what [00:18:00] their ROI is. The other piece of roi, right, is the benefits. So what are all the ways in which you're helping me do my business thing, whatever real estate organization this is, right? And I don't think a lot of startups go through the enough work to really map those costs and benefits to the financial models of the real estate organizations.

And it's a, it's a lot of work and it's hard work to get there, but it, especially in a time like this, it has to be done.

[00:18:28] Jeanne Casey: Fully agree.

[00:18:30] Joe Aamidor: The other one I was gonna add as you were speaking, James, the energy piece, we all probably remember, I think it was JLL that did the 3 30, 300 and the whole kind of framework there was, you spend three bucks a square foot a year on energy. You spend 30 bucks a square foot on your property and you spend 300 bucks on your people. So there is a lot of opportunity to deliver value propositions beyond energy, especially in smart buildings. I think the firms that are able to say, Hey, we actually [00:19:00] can very confidently show you examples of us doing that. You know, that can either be, uh, your, your, your staff are just much more productive using our solution.

And here's how I think they'll, they're now in a position to, to maybe be even more successful because that's more what people are going to be buyers are going to be looking for. Right? I, I, I'm more cognizant of spend, I'm trying to be a little bit more conscientious of what I'm spending my money on. I'm having maybe more trouble getting things approved so I, you know, instead of picking good enough technology, you're looking for the technology that's, you know, at the cream of the crop.

[00:19:36] James Dice: So this is a funny, I think, I don't want to go down this rabbit hole, but this is actually a funny topic to talk about. So the 3 3300 rule is the exact example. where I feel like startups kind of piggyback on top of that rule of thumb. And then they'll say, okay, you're spending 300 on people, or you're spending 30 on space and we're gonna help you save 5% of that, or whatever.

And that directly leads into their [00:20:00] ROI calculation. But they haven't sat here and asked, okay, who's spending that 30 cents? Or who's spending that $3 a square foot? Um, is it the tenant or the landlord? And is, and is who's spending, uh, the 300? Is that the tenant organization or the landlord? And, and how is the landlord thinking about this building?

Or is it a transactional building where they're gonna sell it in a couple years? We aren't going through enough work to figure out exactly how

[00:20:29] Joe Aamidor: Yeah.

[00:20:30] James Dice: and who is what I'm saying.

[00:20:32] Jeanne Casey: Totally. Or is it the owner of the operator because that's not always the same thing, or it's more often.

[00:20:38] James Dice: And every building, for the most part is different. . Um, and so we as technology vendors, I'm saying the royal, we, we have to go through that work to figure that out. Right.

[00:20:50] Joe Aamidor: Agreed. Yeah. Yeah. No, good, good points. Yep.

[00:20:53] James Dice: last thing before we get to like what's happened in m and a in the last quarter is [00:21:00] just broadly thinking about this being our first podcast of 2023. What are, what are your guys thoughts on, um, predictions? Maybe, Joe, you had some good stuff in your latest newsletter. Do you wanna

[00:21:10] Joe Aamidor: Yeah. Yeah. I, I, I won't go into all the detail in the interest of time, but yeah. In my most recent newsletter, which came out a couple weeks back, early February, uh, I just had my own couple predictions for the, for the new year and. I, I'll just maybe run through the four that I included in, and you could argue, I think this will be an interesting year in that we have a little bit of stress on the market side.

We have a need for PropTech, we have a need for smart building technology. We have interest in climate technology more so than we have historically, but you also have just potential stress within real estate assets. And there's been some news, uh, of, of just, you know, owners of properties defaulting on those properties or planning to default on those property.

So, you know, still a lot of data about offices are not empty, but they're not as full as they once were. So there's a lot of these pieces all coming together. I think if we zoom more closely [00:22:00] to just what does it mean for smart buildings in, in no particular order, the, the predictions that I had won, I, I do think we're going to have some rationalization in this marketplace more than we have right now.

And there was a graphic I shared where if you map out types of solution, uh, you map out use cases, you know, do you help me with e sg reporting? Do you help me with I A Q monitoring? I mean, you could argue there's. dozens, if not more use cases right now. There. There's very much a lot of overlap between vendors that do some of these.

And while I think that will continue, it's not going to be the most logical organized market by the end of this year, I do think that we're going to have more rationalization there. Um, it'll, it'll be a little bit clearer. We're moving in that direction. That's partially because of m and a activity that I expect to continue to happen, but I also just think owners and operators of properties will probably be a little bit more aware of what are the solutions I need?

How do I want them to come together? What do I want to integrate? What can be separate? So I think that, that we're going to continue seeing that. And I had a couple [00:23:00] specific, uh, predictions in the newsletter on just categories and, and what I think will happen in, in the year.

[00:23:06] James Dice: you mean by rationalization? You mean here are the boundaries between these different categories? These companies fit in these categories, like those types of

[00:23:14] Joe Aamidor: e e, exactly. I, I think that, and I've talked. Folks that are deploying, you know, individuals at properties, at, at corporates or commercial real estate firms that say, you know, like, there's like 20 companies and they all overlap in certain ways, but not in other ways. And it's really confusing. And I think once you know this market, that's a little bit easier to get your head around.

But if you are just coming into the market as a buyer, it's very confusing. And I think I, I'm seeing signs, definitely a acquisitions that have already happened that we've talked about on this, this podcast, but also just I think some recognition that, that certain things are kind of naturally going to fit together.

Um, also I think some categories of technology. Might remain or become it, it may be more fair to say that's a bit of a niche. Certain buildings will want that, but it's not something that every building is going to want, you know, [00:24:00] access control. Every large building has an ACC access control system. They all have a building automation system.

Generally, if they're big enough, um, there are other categories of technology where you might argue it might be more, more obvious throughout this year. That's gonna be interesting in certain buildings, but not in a lot of other buildings. So all of those things will contribute to the fact that it, it'll be a little bit more, I use the term rationalization, but maybe organization or, or more, uh, it'll be easier to wrap your head around how all these pieces fit together.

[00:24:27] James Dice: Got it. And were those, were those all the predictions? I can't remember the third more.

[00:24:32] Joe Aamidor: No, no. I, I mean, I, I kind of touched on a few of them there. I think there's gonna be an increasing PACE of merger and acquisition activity as we discuss here. I think the one point I was going to add to that, cause a lot of people, you know, I, I, I've read a lot of the other. I don't know that things will move as quickly as we think, though.

There could be some catalyst that, you know, you see accelerating m and a activity and, and so while I don't know that by the end of 2023 there will have been this huge amount of m and a, it may extend a few more [00:25:00] years. You still have in smart building tech world, you know, of the companies that are smart building firms.

You still have a lot of companies that I think are probably not going to raise a lot more money. They're not growing a lot, but they're also not, they, they may be able to get to profitability or, you know, profitability enough that they can keep the lights on and that might lead them to say, uh, we don't need to sell or we want to sell at our price.

So I think it just extends the clock. Um, the fragmentation we have is a problem for buyers, but it also means if you've been able to securely close a couple of key accounts, that may be enough to keep keeping business, um, exactly what happens with those. It remains to be seen, but it may not lead to, we can't raise around, we just have to go sell our business.

There may be a third approach. Can we just, you know, cut our burn, reduce our burn, and, and kind of live to see another day? Um, and, and I think I'll, I'll, I'll leave it there. There were a couple other predictions, but, [00:26:00] um,

[00:26:00] James Dice: Yeah, we'll, we'll put a link to the newsletter as we usually do in the show notes. Uh, Jeanne, you got any, uh, I think you got a hot take rather than a prediction.

[00:26:09] Jeanne Casey: I've got one hot take that I've been, uh, thinking about recently and might cause me to lose a couple of friends after I say it out loud. Um, . But I, I kind of think the e s G fund is this year's spac. It's the new spac. Um, and what do I mean by that? Uh, I think suddenly I'm hearing or seeing announcements formally that everyone is raising, one has raised one or thinking about launching one.

Um, and there's some real opportunity, I think, obviously, especially with, uh, respect to decarbonization and the built world. So there's good reason to be thinking about these themes. Um, and there's also, you know, it's one of the areas that I think is still possible to raise, or at least less [00:27:00] friction to raise LP limited partner capital.

So raise a new fund strategy dedicated to something related to E S G. Lots of limited partners do want exposure to that. That being said, kind of like SPACs, you know, 18 to 24 months ago, I see already a mismatch of supply and demand here. I think there's way more dollars being raised or allocated to companies, um, in the quote unquote with quote unquote ESG themes.

Then there are great investment opportunities, so I wouldn't be totally surprised if in 12 or so months from now or, you know, it'll probably take a little bit longer to see all these funds if, if these funds actually do formally launch and make investments. But I, I. could see, you know, the e s G fund going somewhat of the way of the SPAC in that there's just too much supply, not enough quality demand.

Um, and I just [00:28:00] don't see, you know, very few of these capital allocators raising these strategies all of a sudden have this deep expertise in climate tech or decarbonization or other e s G, you know, adjacent markets. Um, and so I wonder if they really have a unique view, or they're just riding the wave when there's, you know, many fewer waves to be ridden this year than there was in previous years.

[00:28:29] James Dice: Totally. Does this Hot Take rec, um, apply to VC funds? Does it apply to, because there's like funds that are getting raised around a, um, acquiring assets that are some sort of ESG rated. Right? But then there's also funds that are like, we're gonna go out and deploy capital into actual projects that decarbonize like those types of funds.

Is this all three?

[00:28:53] Jeanne Casey: no, I'm really talking about VC funds. Like I think the VC game is so, [00:29:00] you know, is so much about very few bets on a very high volume at the top of the funnel. And when you apply further parameters, like every PropTech fund raising an e s G fund, you're just narrowing the, the pi, the, the funnel that you can really look at.

And I think it's gonna be really hard to achieve that many venture scale outcomes. That being said, I think there are more opportunities. outside of traditional, you know, software like venture capital dollars, um, with a smart view on, you know, either like an opco proco model or the appropriate kind, finding the appropriate kind of capital associated with the right kind of return, like risk return profile, um, to invest in things that aren't just like purely SaaS with an E S G theme.

Um, but instead [00:30:00] decarbonizing real assets. There's, there's real, I'm not as much of an expert in that area, so I can't, I'm not, I'm gonna hold back from commenting on what the supply and demand of capital is there. I'm much more confident saying there's a disequilibrium in the venture market, um, on decarbonization and like ESG themes.

But I do, I think there's probably more of an interesting, more interesting, um, ways to deploy capital when you're not looking at like pure venture capital. Um, in the like decarbonization slash es and I hate, like, interchangeably using the, the term ESG and decarbonization. It,

[00:30:40] James Dice: I did it to you. I'm sorry.

[00:30:42] Jeanne Casey: No, no. It's kind of where, where we are as a market right now.

[00:30:46] James Dice: All right, let's cut off the macro discussion, Joe, unless we have anything else to say there.

[00:30:51] Joe Aamidor: No, I was, one of the things Jeanne and I were, were mentioning, I think just o offhand a couple weeks ago, was that, you know, the, in, in some ways investors might be looking at [00:31:00] climate tech. E S G is having a really big tam. So if you're in PropTech today, you're investing, you're putting capital work in PropTech, you could make the case, well, the climate tech opportunity is even bigger, and that's a way to go raise more money.

[00:31:15] James Dice: Hmm.

[00:31:16] Joe Aamidor: Again, speculative, but, but I think that's also maybe driving the, the, uh, posture towards, or the trajectory towards climate tech and e sg to, to build on G'S point.

[00:31:27] James Dice: Totally. All right, let's get into m and a. So Joe, let's start. You got basically all, you know your list that we'll put in the show notes as well. It's got a list of all the deals that have happened. Do you just wanna kind of run through a summary?

[00:31:41] Jeanne Casey: Yes.

[00:31:42] Joe Aamidor: Yeah. I'll just, I'll just read the ones since we had our last podcast, and again, this is just on my website, it's free for anyone to view. Um, so Energy, well acquired, think Energy in kind of the retail electricity provider space for residential. So maybe not as much smart buildings, but still interesting, uh, insight, [00:32:00] which is a, uh, smart building platform, kinda energy management, operational management.

They bought a company called Soul Vista. Which is in Hospitality energy management. So kind of got them more into hospitality Hotels specifically. Uh, Blackstone acquired a share of Emerson's Climate Solutions business. Uh, that is primarily the components that go into hvac. So like Copeland compressors are probably the number one thing people know when they think of Emerson.

And if you look in a lot of, uh, uh, if you look in a lot of HVAC systems, you'll actually see like a blue compressor, and that is usually a Copeland compressor. So that, that was, um, the majority share has been bought by Blackstone. Uh, info Grid acquired Aqua Core info grid. I tend to think of them as a kinda a smart building platform or a, a single pane of glass solution.

They're based in, uh, Europe, but they operate, you know, here too. And the Aqua Core gave them, uh, we'll, we'll probably talk about this, but they gave them more of an energy management platform That's kinda a specific use case. Generally the, the [00:33:00] scope of what they do. Um, energy, energy, big re um, deregulated energy supplier.

So if, if you live in a state where you can select your energy supplier, Texas, great example, Illinois, another example, they bought Vivid Smart Home. Kind of interesting, I don't know that we'll talk about this one, but the utility, uh, an energy suppliers. There's been a lot of m and a over the past couple years where they've been trying to, I think, make their product stickier, right?

Because at the end of the day, if you're selling, uh, energy, that is a commodity by definition. And a lot of the, the churn in those deregulated markets is, is quite high. Um, so, so my sense is they're trying to, uh, get more stickiness outta their customers. Um, allegiance, which is an, an operating unit of Blackstone that's kind of been built together through a number of different acquisitions.

They bought Lord Green Solutions, which was very focused on sustainability data management for commercial real estate firms. Um, more consulting from what I had seen than, than software, but, Kind fits nicely with what they've done. Um, Dcon [00:34:00] Big, actually the biggest HVAC company they bought Ben Star. Ben Star did a few things, but primarily thermostats and kind of middle tier building or middle size building climate control.

They did have a, a cloud-based solution. Um, Daikin's been pretty acquisitive, big acquisitions over the past couple years. Um, so we'll talk about that one, I believe. Um, s and P Global, um, you know, s and p, uh, they bought a company called, uh, shades of Gray, which was, uh, built out of a, a European organization called Cicero.

Um, very much kinda in the sustainability data category. Um, sealed, which is a, they retrofit homes. They, they retrofit and they provide sealed because they improve ventilation or, uh, insulation, sorry, insulation. They bought a, a small tech platform called, , um, lessen bought SMS assist. That's very much kind of a CMMS type product that has a, a workplace component to, or a marketplace component to it as well.

So I have stores, I have [00:35:00] facilities. I'm looking for service providers. Anything from trash removal, snow removal, uh, leaf, you know, clearing leaves, landscaping, um, that's what SMS assist could provide. Um, back very kind of specific, but I like to cover these cuz they're interesting. Um, Roger's Building Solutions bought a HVAC controls contractor, slus and Paget.

Again, there's a lot of those rollups happening, a lot of just independent, uh, firms. We don't really get into that so much on this podcast. It's actually pretty interesting. Um, and then last one to share thus far, convene acquired in, in Europe et TC Venture or et TC venues. Um, which is another, uh, event space

[00:35:41] James Dice: So the first thing, like when I hear that list, I'm like, that's a lot. Considering I, I felt like the last quarter was pretty quiet. Right? Um, the last part of 2022, at least,

[00:35:54] Joe Aamidor: I, I

[00:35:55] James Dice: like there's actually a lot.

[00:35:57] Joe Aamidor: yeah, I sometimes run the numbers [00:36:00] on to quarter. Has there been more m and a? Has there been less or year to year? Has there been more or less? I think if you look from like 20 17, 20 18, 20 19 to now, there's definitely been more activity, more m and a activity. I'm less focused personally on quarter to quarter, cuz there are cases where you can delay when you announce a deal.

I also just think. Going into November, Thanksgiving, Christmas, new Year's, all the holidays in December, it's probably likely that some firms would say, Hey, let's announce this. At the beginning of the, the year that list that I went through is from end of last year through the first month, month and a half of this year.

Uh, and I think even this month there have been, you know, and by the time this published is published is probably even more that we, we could have added. Um,

[00:36:41] James Dice: despite the ones that you did say, there's a lot from the sort of residential energy, but there, there isn't like this, we're not seeing this like major consolidation in smart buildings or PropTech really. At least in that list,

[00:36:58] Joe Aamidor: And, and I would also argue that there's [00:37:00] not a, a thesis you can point to and say these are the five firms that are all putting this thesis to work. I would say that, yeah, on the independent integrators, service providers, there's just been for years private equity firms buying those up, rolling them together.

So that, I guess you could say is a thesis that's pretty. I think the one that I'm starting to see maybe a little bit is just within the sustainability data management category, there are companies that have a position there that are buying up other, other, uh, assets. I think we're gonna talk about that a little bit.

We've talked about that on podcasts before. But, but other than that, you're right. It, it's not like everyone's trying to build prototypical PropTech building or business that looks like X and they're all kind of taking their own way to get there. Um, maybe we see that, or, or may, maybe we don't.

[00:37:45] Jeanne Casey: I have a question for you guys. Um, or at least an observation. I'm curious if it resonates with either both of you. Um, I've been surprised to see what I'll call. More mergers than acquisitions by [00:38:00] large incumbents announced recently. It feels like, I mean, even if they're technically an acquisition of like a startup, buying a smaller startup, I am.

I've been, or it feels like I'm seeing more announcements of that kind of like combination strategy of startups versus the traditional like strategic sale to a large incumbent.

[00:38:22] James Dice: Like info grid and aqua core? Is that what you're saying? Like that as an

[00:38:27] Jeanne Casey: Like an example like that versus, um, you know, at JCI or a Siemens being more acquisitive.

[00:38:34] Joe Aamidor: Yeah,

[00:38:35] Jeanne Casey: Does that resonate or is that just,

[00:38:37] Joe Aamidor: I, yeah, I, I think it actually is happening. I, I, yeah, I hadn't thought of it exactly that way. I, I, I, my take from, from your point, Jeanne is one, there's just so many startups out there. When you really start digging into this market, you realize there's so many companies, and you could argue some of them aren't in terms of product that much different than something that you might already have at a jci, at a [00:39:00] Siemens, at any of these larger companies.

So they might look at some of these companies and. You know, we already do that to some degree. Maybe our go-to market is a little bit different. Uh, yes, they've built a business, but that doesn't really add from a product point of view a lot. Whereas two or three small startups or two might say, you know, if we come together that might help us extend our runway, that might help us be a little bit more compelling to a buyer.

Maybe we have some shared customers that already like both of us, and so you know, we're gonna do right by them and maybe be more entrenched in those businesses. Um,

[00:39:33] James Dice: And how much is the, are the fundraising cycles a part of this too? I wonder because like if we look at that example, Aqua Core had raised money several years ago, and they're probably in a position where they needed to raise while the market is kind of on a downturn, info grid had just raised a lot of money.

Right. So there's probably like some synergies there, just with the way that the market turned out for both of them. But I, I, I, you know, [00:40:00] I don't know if I have a real piece of insight for you there, Jeanne. Um, I, I do know that if you look at Joe's list, you know, back to the list on his website, Siemens has been extremely inquisitive.

JCI has been over the years, just maybe not in this quarter, sh name of Schneider, right. Um, Honeywell, et cetera.

[00:40:19] Joe Aamidor: yeah,

[00:40:20] Jeanne Casey: fair. I think we're not gonna have like statistically significant data for another 12 months cuz these deals take so long to actually handle, like the lead time is probably six to 12 months at least. Um, and then there's a delayed announcement that you guys, you know, potential.

[00:40:35] James Dice: let's dive into a few of these. Um, I'll kind of lead us into ones I think are the most interesting. Let's start with Daikin. Joe, for those people that don't know Daikin, you said largest hvac, um, con largest HVAC oem.

[00:40:50] Joe Aamidor: yeah. Background on Dcon Dicon, uh, based, headquartered in Japan. Have grown in kind their number, their, their first business was, was in vr, [00:41:00] rf, they call it vrv, variable, variable refrigerant flow. But Vrv, I think is variable refrigerant volume. But um, basically heat pump type type HVAC technology.

Very popular in Japan, spreading very popular in other parts of Asia. More popular in Europe now, becoming more popular in America. They have, um, they, they're maybe not as much of a household name in the us, but they own Goodman. Goodman is more residential. But if you drive around just a suburban neighborhood and you're actually, if you're a dork about it, like me, and you're looking at people's HVAC units and, um, uh, you'll see like a lot of them are Goodman because it's, it's very much reliable.

They're all built America. Um, and. You know, good value is kind of how I think of Goodman. They bought a couple years back, they bought McQuay. McQuay was a big chiller. I mean, not as big as train, not as big as JCI New York, but they were a chiller business. Now they call that the Dyken applied business. So Daikin is a significant player.

They did not rebrand Goodman. So Goodman is still Goodman. So maybe people, you know, who, who are listening just don't realize that's actually part of Daikin. Um, [00:42:00] but, but Daikin, in terms of just pure play HVAC company, very strong. Uh, not as strong on the control side. Uh, you know, VR RF systems don't te tend to have as mo as robust controls as, as you would if you have, you know, a chiller and air handlers and whatnot.

Um, but, but that's taken in a nutshell. Um, they're, they're a very big player. Um, and, and not just in Japan. That's just, you know, where they're headquartered and where they were founded.

[00:42:23] James Dice: Yeah. Yeah. And then this acquisition, so they, they acquired Van Star, which is a controls company,

[00:42:29] Joe Aamidor: Yeah.

[00:42:30] James Dice: building sort of controls. We'll talk about sort of my take in a second, but this is similar to a bunch of other acquisitions on your list. Do you wanna kind of run through those?

[00:42:39] Joe Aamidor: Yeah. Um, you know, over time all of the big OEMs, not all many of the big OEMs have bought a business to get into the smaller building or mid-size building control space. So Honeywell back, I think 15 plus years ago now by Nova, there were a couple different businesses with [00:43:00] Nova. Um, but Novar had, if, if you go into a big box store, sometimes you'll just look at the thermostats and they're actually Nova thermostats if, if they're old Siemens bought site controls, same type of of business.

Um, they recently bought wat sense in, in between there they bought J two Innovations. Um, but those were all, uh, companies that were focused on the buildings that wouldn't buy a full-blown building automation system. A, a big bo you know, you go into a Best Buy, they're probably not gonna buy a building automation system.

They have rooftops, they have ther. But they might want some supervisory control. They might want some visibility, they might want to be able to look outside of that building. How are, how are things running in that building? Um, JCI has launched something called Verus, uh, that is their kinda mid building or multi-site type building control system.

Um, and then you have larger firms. Grid Point has raised, raised maybe a year ago, a big round. So that's an interesting category. And Vent Star was playing in that space as well. They have a thermostat product, uh, actual physical thermostats. [00:44:00] They, they work well in that middle-sized building. Uh, they have a, a cloud-based kind of reporting and, and visibility solution.

So they fit into that same category. Um, and that allows Daikin to, to play in that space where a lot of their peers over the years have moved into.

[00:44:14] James Dice: Yeah, totally. I, I think I have two thoughts here and I think it speaks to a couple different things. One is the control system allows, you know, Daikin's primary customer, which is system integrators and HVAC contractors, right? It allows those companies to perform service remotely. It allows those companies to, you know, have service contracts and, you know, stick with the same line of products that they might buy from Daikin usually.

Right? Um, the other piece of this is, I saw someone on LinkedIn the other day that said, um, it was actually a comment on one of my posts, but it was from someone like a VC from outside the industry. And he said something along the lines of like, I'm not worried about decarbonizing buildings because we're just gonna electrify the grid.

[00:45:00] And I think that is a. like a, an ill-informed take because if we were to take every, you know, and I think this shows kind of what Daikin's thinking, which is it's not just about selling heat pumps everywhere to decarbonize. It's also about, hey, we also need control systems to make those heat pumps do stuff better.

Right. Um, and even if we had heat pumps everywhere, we would still waste energy without the controls that go along with them. Right. It's not just about that piece of decarbonization. Um, and we have a whole white paper on this, you know, the importance of controls in small buildings where there currently aren't any.

But Joe, what, what do you think? Is that kind of how you're thinking about it as well?

[00:45:43] Joe Aamidor: Yeah. I, I, I think so. Um, the, the added layer to that, uh, even with heat pumps, even with electrification, demand flexibility, which is something we don't talk about a lot, that's a really big issue, right? Being able to use energy at the right times, being able to, [00:46:00] uh, pull, pull back on, or, uh, roll back what you're using at certain times, um, you really need controls to do that.

Um, and that becomes increasingly important as you have more variability in terms of generation of energy on the grid.

[00:46:13] James Dice: Yeah, so it's not just demand response, it's also controlling ventilation and making sure the heat pump's not, you know, conditioning a space that it's unoccupied, those types of

[00:46:22] Joe Aamidor: Exactly. Exactly.

[00:46:23] James Dice: super interesting. I, I hope we see in that category of acquisitions, I hope we see more investment and make, continuing to make controls for small buildings simpler and easier to use.

Kind of all the things we sort of outlined in our, our white paper. Okay, cool. That one's interesting. Let's go to the Blackstone one, Joe. So I'm not sure I, I, I see. , why this is interesting to you. So I want to kind of go into it a little bit. So you talked about Allegiance, which is a Blackstone company acquiring Lord Green.

Why? Why is this cool

[00:46:56] Joe Aamidor: yeah. No, uh, well, so, so one, [00:47:00] I think, you know, Blackstone, very sophisticated investor. They've made a number of acquisitions. They've kind of brought them all together. Brand they now call Allegiance. Uh, their website's actually pretty useful cause it just lists, these are all of our businesses and it, it summarizes them and explains them.

One of the businesses they had bought was a, a company called Re Tech Advisors. And I, I think that was a couple years back, um, maybe even before they, they called this grouping of businesses Allegiance. Um, but it's, it's very much playing in the same space as Lord Green in the sustainability data management and reporting space.

So when we talk about climate tech earlier, uh, when you own a lot of real estate, one of the, from a, from a sustainability point of view, one of the big roles you have is reporting out to, uh, or, or adhering to the various standards. Um, GRESB sa, sabe, uh, energy Star, there, there, I mean, there's a list of probably 15 to 20.

So you're, you're doing that and a lot of that is expectations from the people who have invested in your funds. So the investors of your funds [00:48:00] say, well, we wanna know like what, you know, we, we want all these details. So you have solutions that do that. Um, which can include a software solution to collect the data, to analyze the data software to help you report, but there's usually in there a consulting component to help, you know, pull together not just the quantitative metrics, but also the qualitative side of, you know, you, you, you, I think in GREs, GRESB specifically, you have kind of a narrative around, this is our strategy, these are our goals, this is what we have done thus far.

Um, so you, you can have that help. And then there's also things like, uh, data validation, da data completeness, that having just a software solution may help you do some of that, but they may be useful to have a human element. Um, I think what's specifically interesting about Blackstone is that the businesses they have acquired kind of go across the board, both from re tech and uh, and Lord Green with consulting to actually report every. Various sustainability standards, but they bought a company called Therma. Therma was actually a, a [00:49:00] contracting business that would actually go in and retrofit buildings, or can, I shouldn't say, did they, they still do retrofit buildings. So, and, and there's other businesses in there that, that they own that not just help with data management and reporting, but actually what I would call kind of cl or say close the loop on, we can actually help you improve your buildings.

Now that obviously is a huge market. A lot of it's very localized. Um, so I don't know that Blackstone's gonna be knocking on every door across the country anytime soon saying, Hey, we can do everything on end. But of the pieces they've acquired, they do that. Lord Green looked a lot like re tech advisors.

Um, I had been, I, I had heard, you know, they're, they're fairly similar, fairly competitive. There's a few companies out there that kinda have that role of, if you're a large commercial real estate firm, a large corporation, and you just need help figuring out sustainability reporting, there's kind of a, a short list of companies you'd go to.

And these were, were typically two of them. It would be on that list. So I don't know exactly what, what, what's being thought other than this might just give you more scale. There might be more consulting bandwidth, horsepower there that, that, that, that you can use. But I think it's interesting [00:50:00] because one, you're seeing sustainability, data management, sustainability as a strategy or a strategic imperative driving a lot of investment on the part of real estate companies.

And then here's a, a big business that's buying up smaller businesses that also has more of an end to end solution, I would say, than others.

[00:50:18] James Dice: Got it. Jeanne, you got any? You got any thoughts on this? This one?

[00:50:21] Jeanne Casey: Oh man. Um, this was a lot of learning in real time for me, honestly. Um, but it is interesting to see, I mean, this is much more of like a private equity strategy, so it's interesting to see the parallels or at least draw the, the comparison to, you know, startups and in the venture market trying to become or own more of.

Uh, you know, a, a journey, a user journey or like a full suite or a, a platform like solution. This is kind of the private equity equivalent. I, I think, um,

again, I, kind of.

[00:50:59] James Dice: a lot of people are [00:51:00] saying that that's gonna happen. Yeah. Yeah. I think a lot of people are saying that that's gonna happen to smart buildings. Right? That this kind of what you just described, Joe, from this reporting, you know, these reporting use cases. Yeah.

[00:51:13] Joe Aamidor: yeah. I mean, I, I, I, well, I think one private equity, I would not be surprised if they play a bigger role in everything worth we're talking about today. Smart buildings. Um, but, uh, but, but yeah, I also think, you know, the reporting piece is kind of a nice anchor in some ways. I don't know that Blackstone would say that's the anchor that we have for our entire end-to-end legions business, but it does make a pretty nice anchor.

[00:51:36] James Dice: Got it. And, and you mentioned that in a similar category here, there was another acquisition, which is Graz acquiring asset resolution.

you wanna talk about that a little?

[00:51:46] Joe Aamidor: yeah, I'll talk about very briefly. So GRE, I mentioned them, so, so if you are a real estate investor, a REIT basically, so Nuveen would be an example. You are most likely reporting to GRE every year. It's one of the leading standards, [00:52:00] uh, which is kind of validating, verifying performance around it's, it stands for the Global Real Estate Sustainability Benchmark.

Um, and there's others that are, are like them right now. The process typically works, either you submit data every year to GRE or you work through a consultant, or you work through a software solution, or maybe it's both software Plus. So, um, there's a whole ecosystem, uh, and, and again, GRE is not the only one, uh, standard that people are reporting to, but you could argue they've established themselves as being one of the leading standards for, for, again, mostly for commercial real estate firms, maybe not as much for a corporation that just has real estate.

Um, asset resolution is kinda an interesting data play. I see them as being maybe data. Both about individual assets, whereas GREs is typically more focused on a portfolio. Um, and there's a bit of a component there where they're, they're kind of market facing, right? So if you are investing in real estate businesses or real estate assets, you, there, there's the market for that.

And you may be using, you know, sustainability type data. Um, but I, I, I see it as just [00:53:00] generally being, uh, getting deeper into going downstream to some degree where GREs sits today. Um, I would also say that there's, you know, some, some overlap between what different companies do. So it's kind of also an interesting fragmented space.

On one hand we're seeing acquisitions, but you could also argue that there, there remains this, this fragmentation. Um, but it, but it, it is again, another kinda sustainability data management driven deal.

[00:53:28] James Dice: Okay, let's move on to info grade. We, we talked about it a little bit, acquiring Aqua Core. Um, you want to kind of explain how you see this one, Joe? And then I have some thoughts as well.

[00:53:41] Joe Aamidor: Yeah, yeah, sure. Um, I think our listeners may be more familiar with Aqua Core than with Info Grid, though,

[00:53:47] James Dice: They've both been on the podcast before,

[00:53:50] Joe Aamidor: yeah, they've both been on podcast, so I guess everyone actually, uh, should know both. Um, so Info Grid based in London, uh, ACORE is based in the DC area. Um, info Grid [00:54:00] operates in the US as well.

I'm actually not sure if Aqua Core operates outside of America, but info grid has kinda established itself as, as one of these, as I mentioned earlier, kinda a smart building, uh, uh, operating system. You could argue data across multiple different use cases, multiple types of data, multiple data streams.

Historically, those companies are useful in that you don't have to have 10 different places to find 10 different data streams. You can go to one place, though in reality. There's still a lot of silo data in a lot of buildings or across a lot of portfolios. So there's kind of, there's a process you have to go through to get everything onto one system if you really want to get onto one system.

And I, I, I, you know, that's more of a multi-year journey than, than we buy a software solution when we all of a sudden everything's in one place. But they, they, they were across the board doing a lot, a lot of different data types, you could say, could be managed in their solution. Um, Aqua Core, very focused, you know, starting on energy management.

That kinda includes to some degree sustainability, data management. [00:55:00] Um, but they look a lot like a lot of the other interval data. I mean, historically, a lot of the interval data solutions, right, where we put meters in your buildings, we collect those data. It's 15 minute interval. It tells us all kinds of interesting things about what's happening in your building, easy to identify, a lot of inefficiencies, so on and so forth.

If you have all of that information, you can easily convert it into carbon emissions and have a sustainability story as well. So, so these two companies coming together, it definitely gives info grid a lot more depth around energy management. You could argue energy and sustainability management. Um, which to our point earlier is where you have a solid, uh, value proposition, solid roi, right?

Energy and, and, and, uh, energy savings. So those two companies coming together, you, you could argue it does make info grid, which based in the UK more of a player in the us. Um, obviously the US is a huge market and, and it's, uh, in a lot of ways fairly similar across the country, whereas you could say in Europe, each country is a little bit different.

Um, so it it's easier to, to scale, I would say in [00:56:00] the us Yeah.

[00:56:00] James Dice: I think one of the interesting things about this acquisition is like you have a company info grid that doesn't currently do, to my knowledge, right? Everything changes, you know, faster than I can, uh, you know, hear about it sometimes, but you have info grid who doesn't currently do integration with onsite systems.

It's typically, you know, slap a cheap sensor, not cheap, right? Slap a low cost sensor into the building and create data that we didn't have before, and then provides some sort of software experience that. Help someone do their job better. Right. Totally needed. But interesting that they're not coming in and saying, we're gonna integrate with your automation systems.

We're gonna integrate with access control. They're sitting out as its own new silo usually. Right. They make an acquisition of a company that also does that. Right. Where we're coming in and putting meters in, we're coming in and, and you know, they're basically at the energy silo, like you said. Um, I'm not trying to offend anyone by saying silo, but just like they do that as a point solution.

Right. [00:57:00] Um, so it's interesting now we have the combination of the two, but we still don't have, uh, legacy systems integrated into that solution. And I feel like there's a limitation there that is still, you know, you know, it's a new stack, new use cases, new ip, but it still feels like there's a lot that needs to be added to that solution to be comprehensive in the way that we're talking about these roll-ups happening in the industry.

[00:57:26] Joe Aamidor: Yeah. And, and I think that's for a variety of reasons. One, it's just very difficult at scale to integrate with a lot of the on-premise systems. Um, there are solutions now that kind of solve that specific piece. but it remains tough and it's different in every building. So it, it's not a repeatable process like you would, you would want if, if you're deploying your own, your, your own, um, software.

But, but I also think there may be some hesitancy on the part of a building owner, well really facility operator, building operator, I might say, you know, I don't really want anything touching my building automation system. I want information and then I'll [00:58:00] go to my building automation system and, you know, change schedules, setpoint sequences, things like that.

I think that might change a little bit. One, because we just have a shortage of labor. So if you're looking to augment, um, individuals with software, one way to do that is to, to, you know, take some of the things you're doing as a job and saying, can we just automate that piece? So I'm still involved. Um, so I'll, I'll stop there.

Yeah.

[00:58:23] James Dice: The other piece of this, and I think you would agree with me, Joe, here, is that in that space that Aqua core was in, which is I'm gonna do cool stuff with utility bills and I'm gonna do cool stuff with interval meters. That sort of energy management information system space, energy information system, that space is unique in that the software products are not that differentiated in that category.

There's a bunch of them, right? And they're typically catering to the user persona that's the energy manager, the very technical engineer like I used to do, you know, in the first 10 mi 10 years of my career. And [00:59:00] it's really difficult because there aren't that many of those folks out there, and a lot of owners don't have those people on staff.

And so I, I think there's a, a difficult, like that category has difficulty jumping over to adjacent user personas. How do I get into. The sustainability manager, how do I get into the e s G person? Right, at the real estate organization? Well, you're gonna have to help them with what their problems are, right?

You're not helping the energy manager, you're helping that other person. Um, the other direction, right, is the facility managers. It's really difficult to go from, I have meter data to, I'm helping a facility manager with their job, right? And I, I think if I, and I haven't heard, I haven't talked to Logan in a few years from Aqua Core, but if I had to like say what the problem is with that business and why they aren't, you know, why aren't they not the ones acquiring info grid?

It's, it's like, it's because that jump to adjacent stakeholders and user engagement is actually a [01:00:00] really, really difficult one to make.

[01:00:02] Jeanne Casey: I think that's

a really, really great point. Yeah. I was just gonna, uh, you know, kind of related to that, I think it's easier, and I can't think of an example off the top of my head. I'm curious if either of you can, but it's, it's easier to move, um, top down than it is bottom up. And what I mean by that is like top down from the actual like largest budgets, which will usually come from owners and then probably operators and then probably facility managers and like folks actually like boots on the ground.

I think it's easier to start up there even though, you know, from like a, a portfolio view where you're, you're maybe not actually like ha you, you don't have as much measurable impact, um, but you're speaking to the people who have the largest purse strings. So I'm cur do you guys have, you know, off the top of your heads examples of companies [01:01:00] who have successfully gone in that direction versus what I think you're kinda describing in the friction that, um, you know, these folks have

potentially run

up against is going bottom up is much harder.

[01:01:12] James Dice: totally. Well, Joe and in Joe's newsletter, he kind of has a couple graphics that I think speak really well to this, which is like, top down is like you had a Freudian slip there, gene, which is measurable, right? Measurable has done a good job of starting at the top. I think, I think Aqua Core was sitting in the middle, which is like a more technical user, more, uh, metering required to enable what they were building.

And then you have like, uh, an F d D product or a, a deeper analytical product that it's all the way on the right, which is like, I'm gonna cater to a technician or a facility manager. You have that spectrum here, and you're right, I think Measurable is a good example of like starting on that full left side and going, you know,

off use cases.

Um, we said we weren't gonna talk about Measurable this time, though. Maybe there's another example.

[01:01:59] Joe Aamidor: [01:02:00] Uh, well, I, no, I agree with everything to build on all of that. So Gene, I think you're right. Um, the budget piece is, I think, critical also, just from a strategy point of view. If you go to the top of the organization and say, we want to deploy a solution that can help you solve this big hairy problem issue, which is sustainability, uh, broadly getting to net zero broadly, and that, yeah, the form that takes is we need to track these metrics and we need to report out on these metrics.

That's something that you can kind of get the, the whole organization. To buy in on. If you look at solutions that are more interval data focused, oftentimes you have individual facility teams. Maybe you have separate operating third party operators across your portfolios who might say, well, you know, we have good experience using this meter, this metering, uh, meter reporting technology, interval data technology we're using that it works well, and all the metrics you need to do the sustainability reporting.

We can, we can send them to you. We can, you know, do that through an api. We can just report, you know, send you a spreadsheet, whatever it is. Um, so I think each of those solutions has [01:03:00] kind of carved out a niche, but it's, if you're trying to scale across an organization, which all these companies are trying to do, starting at the, we have the, the strategic solution for the entire portfolio for sustainability data management, it's easier to start there and then go down.

Um, now the other side of. That I think has not really been resolved. When you look at how do we actually get to net zero, like how do we actually hit the 2035, you know, let's say target, A lot of that requires some real detailed data about those individual assets. So you may, you know, at at, at the portfolio level, say we know how our builders are performing.

We have all our energy star scores. We see they're getting better. But that doesn't, that just continuing on is kinda incremental improvement where what we probably need is more, uh, you know, more significant improvements. And some of that is going to require much more intimate knowledge of what's happening in individual buildings, connecting to the systems, pulling data outta the systems.

Uh, that's, I think what all these companies are are seeing. It's gonna be a little [01:04:00] messy, I think, getting there

because you just have so many different companies. You have a lot of legacy software, you have a lot of newer software that don't necessarily completely integrate.

[01:04:08] Jeanne Casey: well and also a sales

motion that hasn't targeted that decision decision maker or that

[01:04:16] Joe Aamidor: Yep.

[01:04:17] Jeanne Casey: before. Sorry. Go ahead, James.

[01:04:19] James Dice: yeah, it's, it's sales motion, but it's also like there's a gap here and I call it the portfolio site gap, which is like decarbonizing happens in a mechanical room, right? It doesn't happen at the portfolio level, right? So top down only has a certain amount of power and you ha, I think it's a product thing and a business model and a sales motion, right?

Where I have to. Well, what is, what do I have to do to get into the facility management processes and operations, right? Um, because it's capital upgrades, right? And that might be the facility manager, it might be the property manager, it might be someone's portfolio. We have to integrate decarbonization into the, [01:05:00] into the capital upgrades.

It's, uh, maintenance, right? It's,

[01:05:03] Joe Aamidor: Mm-hmm. . Mm-hmm.

[01:05:05] James Dice: it in with how they do things, right? So it's, it's that gap and it's that, like you're saying, I have to get and spread throughout the organization. And I think the, the companies that are gonna win isn't, isn't necessarily top-down, but it's somebody who can engage from wherever they started and move from one to the next, right?

[01:05:25] Jeanne Casey: I like the way of of that. You just frame that up. Yeah.

[01:05:30] James Dice: Let's call it. I think this is a good, good discussion. Um, we have a bunch of on our list that we intend to get to at some point that I think will be interesting, but let's call it for this quarter. Let's close out with some, uh, carve outs. Any, um, books, TV shows, podcasts, et cetera, that have had a, a big impact on you guys lately?

[01:05:53] Jeanne Casey: I just, I'm a little behind on this one cause it's not like a new book, but I just read the Gold Finch by Donna [01:06:00] Tart and really enjoyed it. Um, I think that there's a poorly scored Rotten Tomatoes movie also of that story, but the book was fantastic. I can't vouch for the movie though.

[01:06:15] James Dice: And this is fiction.

[01:06:17] Jeanne Casey: it is fiction. You know, six or last summer I discovered I used to only read like, um, business or like non-fiction books cuz I'm a dork.

Um, and I discovered that I like reading stories. So that, yeah, that's one of my recent fiction reads,

[01:06:34] Joe Aamidor: On that note, I was at, I was at our library this week. I was just kind of browsing. I had to drop some books off that were overdue, but luckily, uh, not that overdue. And, and I was just, I usually just go up to where all the, the fiction or non-fiction books are in our library. There's two floors and I was like looking around for fiction books, so I was like, oh, maybe I'll try a fiction.

And I asked the librarian, I said, where are the fiction books? She's like, oh, they're downstairs, sir. Said, oh, yeah, yeah. I've never actually checked out a fiction [01:07:00] book from our library, so I wouldn't know that. And sure enough I found them and uh, and then she's like, you know, they're the way they're organized.

I'm like, okay, okay. I think I, I, I think I can find, find, figure it out. But it, I mean, the librarian was very nice, but it was just like funny. It was assigned to me. Like, I guess I don't get a lot of fiction books. Um, in terms of carve outs, I mean, can I, can I say the World Cup as a carve out? Is that, I guess James, that, that

it's a little old, but it was pretty good.

Uh, pretty

exciting

[01:07:25] James Dice: that happened. Yeah.

[01:07:26] Joe Aamidor: I know. I, it's like, it's such a weird timing, right. Um, but uh, I also, I'll say, uh, I just, I think after the World Cup, I don't know it had anything to do with the World Cup. Finally started getting into Ted Lasso, which is kinda incredible. Cause I think it's been out for a number of years.

I played soccer, love soccer. My mom is English. I have family in England. So like you, that should have been like the first show I would ever watch. Somehow we just never started watching it. And, and I guess just yesterday, I think they announced the third seasons coming out next month. So,

[01:07:55] Jeanne Casey: I was gonna say that's amazing timing cuz now you're gonna be able to power through [01:08:00] all three and it'll just be fantastic.

[01:08:02] Joe Aamidor: The, the one thing, not to pick on my wife, but in, in talking through shows where there's English speaking English accents, she wants remark to me that sometimes it's hard for her to understand English accents. And I think certain speakers in England have very deep, like, you know, the, the FS and the ths kind of all melt together.

And I, I don't have that I issue cause I just, I, there's been enough native English speakers, but I think for a while it's like, I don't know if I wanna, like, I can't figure out what they're saying. And so, um, but, but anyway, we, we've gotten through it and or started getting through it.

[01:08:36] James Dice: So my carve out is related. So I heard, um, Brene Brown interview, um, coach Lasso and Beard, which is, uh,

[01:08:46] Joe Aamidor: Mm-hmm.

[01:08:48] James Dice: uh, what's his name? It doesn't matter. Brendan Hunt. And obviously Jason Sudeikis and she is, is such a good interview. Somebody sent it to me and it sent me down this like Brene brown rabbit hole.

And so [01:09:00] my carve out is gonna be her latest book, Atlas of the Heart, which is really, really good. It's like going deep into the fact that they're actually like 87 different emotions. and humans, most humans in our culture have a very small emotional vocabulary. It's like three emotions, happy, sad, and mad , right?

But they're actually 87 of them, and I think we could all do a better job of like actually refining our vocabulary a little bit there. So Atlas of the Heart, it's a really good book. Um, but also that podcast where Brene Brown interviews Ted Lasso and, and Brendan Hunt. So, uh, let's, let's call it, thanks so much for the two of you for coming on the show.

Again. We'll do, uh, volume five. Hopefully there's more. Hopefully there's more m and a to talk about in a couple months.

[01:09:48] Joe Aamidor: And if not, we have a list of the ones we haven't gotten to, right? So

[01:09:52] James Dice: Yeah, we could always recycle some. So anyway, thank you so much.

[01:09:56] Jeanne Casey: Thanks James.

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