🎧 #037: Shannon Smith on making analytics a painkiller, not a vitamin
“Every building owner is on their own path and it’s our job as an industry to meet them where they are on that path, not to yell at them from the end of the path, telling them that they're losers, if they're not over here.”
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Episode 37 is a conversation with Shannon Smith, CEO of PointGuard, a building analytics software company out of North Carolina in the U.S.
Shannon and I have had several offline conversations, so it was fun to finally hit record for this one. We talked about all things analytics in 2021, including where the actual market is today, compared to where we in the Nexus community wish it was.
There were several subtopics within that, that I like to call analytics for X; so we talked about analytics for capital planning, analytics for COVID, analytics for risk mitigation, and more.
Mentions and Links
The Abundant Power Group (3:02)
Clean Source Capital (4:52)
the Pareto Principle (18:36)
You can find Shannon Smith on LinkedIn.
Thoughts, comments, reactions? Let us know in the comments.
How Shannon got sucked into BMS (2:59)
A ‘violent’ agreement with past answers to James’ favorite question + a unique take from Shannon’s finance perspective: debt mentality (6:55)
Drivers of change: talent drain, tenant focus, COVID (10:52)
Deep dive on PointGuard (12:26)
The state of the analytics industry (14:21)
The need for consolidation (22:10)
Vitamin to painkiller perspective (26:06)
Onboarding - the customers, and the buildings (34:13)
Analytics for service contracts (38:31)
Looking toward the future: analytics for COVID (41:40), what needs to be unlocked (44:43), and reasons for excitement in 2021 (45:19)
Note: transcript was created using an imperfect machine learning tool and lightly edited by a human (so you can get the gist). Please forgive errors!
James Dice: [00:00:03] hello friends, welcome to the nexus podcast. I'm your host James dice each week. I fire questions that the leaders of the smart buildings industry to try to figure out where we're headed and how we can get there faster without all the marketing fluff. I'm pushing my learning to the limit. And I'm so glad to have you here following along.
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All right. Episode 37 is a conversation with Shannon Smith, CEO of point guard, a building analytics software company out of North Carolina in the U S. Shannon. And I have had several offline conversations, so it was fun to finally hit record for this one. We talked about all things analytics in 2021, including where the actual market is today compared to where we in the nexus community wish it was, there were several subtopics within that, but I like to call analytics for X.
So we talked about analytics for capital planning, analytics for COVID analytics, for risk mitigation and more so for all of you data nerds. Uh, building performance nerds, uh, without further ado, please enjoy it. Nexus podcast, episode 37.
All right. Shannon Smith. Welcome to the show. I'm excited to unpack some things with you today. Can you start by introducing yourself?
Shannon Smith: [00:01:41] Sure. Well, look, I'm, I'm Shannon Smith. I'm the CEO of, uh, point guard, uh, in Charlotte, North Carolina, and you know, James, one of the first things I want to do is just thank you for nexus.
I know we've talked about this outline, but I've really enjoyed it. Uh, of course the pod and his letters are interesting. in a couple of our team members are nexus pro and not actually use your labs with one of our new onboarding hires. It's all great stuff, but what I really appreciated the most and some of these new friends now, now talk to offline either to ramp with, or to work with.
But I think the other thing that surprises me is I've enjoyed it, really listened to other CEOs like me talk about their business. Yeah. And perspective like dead Nolan or the brain by Scott. I think that this stuff is good because we're all in it together. And it's good to hear what other folks are saying.
So thanks. Thanks for what you're
James Dice: [00:02:25] doing. Yeah. Something you told me about a month ago or so is that you had Terry Sotera was on nine. You and Terry have become friends. So shout out, shout out to Terry,
Shannon Smith: [00:02:36] shut up. It was breakout rooms and the next is proud. Cause that's where we really get to talk and get to know each other.
So that's good.
James Dice: [00:02:42] Awesome. Awesome. Cool. Well, before we unpack everything we're going to talk about today, which is lot around analytics for buildings. Can you take us through like how you got to this point? Uh, how did you, uh, end up where you're at today?
Shannon Smith: [00:02:56] Sure. Well, you told me to be quick and it is quick, but we have a little bit of an interesting origin story.
Um, and I started abundant power, which is point guards, parent company in 2009 after a career in private equity and mergers and acquisitions. So I'm a finance guy, got my MBA at the university of Virginia. And then before that was some philosophy economics, double major and into grad school and French lit.
So I went before I went to wall street. So I am not the typical, you know, Engineering background. Um, but what I wanted to do in 2009 was solve a planetary problem, uh, using a commercial solution. That's our motto and our company is commercial solutions for planetary problems. And the one we really wanted to go after was climate change.
So point guard is part of a family of companies to other companies, but I spend all my time on the software business. so that that's sort of my background, and then point guard. started as well as a finance company. Uh, okay. Can I pause you real
James Dice: [00:03:51] quick? Can you tell me about these office chair, these paintings of these office chairs?
So for those of you that are just listening on audio Shannon, before we get into the nerdy stuff I have to ask there's, there's two painted one red, one blue, uh, office chair on his, on his wall behind him.
Shannon Smith: [00:04:07] Well, I am the father of two sets of twins. And part of the reason why I actually left my wall street job was to be more present with my kids.
And so I have a wall of art up here that is their artwork. And that that's what my son and daughter painted probably when they were seven or eight years old. Okay.
James Dice: [00:04:26] I didn't know if you were just in your office and your board and your board, your office materials,
Shannon Smith: [00:04:34] much more artistic than I am, but I'm like, that reminds me of him.
James Dice: [00:04:38] All right. Cool. Sorry to interrupt you. Let's go ahead. Yeah, go back to Flint guy. You're going to say.
Shannon Smith: [00:04:42] Yeah. So just the origin, the story, there was a little different because we did start out in finance. In fact, we were managing a big finance program through our, one of our other finance companies, clean source capital for the state of Alabama, and, um, introduced to them around 2014.
This idea too. finance control systems upgrades, it then would repay the loan to buy those control system upgrades over a period of time using the savings generated by the control system itself. Yep. And, uh, we looked at a lot on software and ended up going with sky Foundry and to help these customers do that.
Of course, I called petsy up and I said, what the hell have you sold me? Uh, he said, hire a developer and team. And, but with every one of your engineers and that's how we, that's how we got started and we grew and grew and, and, uh, and, and, but it was a shared savings model. And finally we spend point guard off in 2018 because, um, Number of our customers asked us that they could use a software.
And so we decided that it could in fact be used by others. And so the very end of 2018, we launched point guard, spun it out in a different subsidiary, uh, and brought in some investors in 2019. So I think Matt Schwartz or your pocket said, we got sucked down to BMS, kind of didn't didn't expect to get here.
The people ask me how we got into point guard. And I said back walking back, of course, I actually
James Dice: [00:06:06] said that. That was me. Who said, I feel like. I came at this industry from the energy management, angle, you know, um, fresh out of school, want to change the world, want to save energy.
and BMS controls has just sucked me in the last 10 years, uh, because you can't ignore, you can't ignore it. You can't ignore all the problems there. If you want to solve the bigger ones.
Shannon Smith: [00:06:27] Not at all, not at all. So yeah, so we, we kind of come at it from a finance perspective and, um, and, and did look at the shared savings model, which is out there.
Uh, but didn't ultimately went for a straight SAS model, eventually in 2018.
James Dice: [00:06:41] Cool. Cool. All right. Before we get into, point guard in a little bit more detail, let's go with a couple of my favorite questions here. so let, let's do the, the historical one. I know because you and I have had these conversations before.
Why do you think technology is so far behind, even though we're in 2021, we'll do the 20, 20 question one more time.
Shannon Smith: [00:07:03] Well, I, you know, I guess There's nothing new to add. I mean, I've listened to your podcast enough to know that there's violently agree with most of all the perspectives. And have I really identified, you know, lack of standards, OEM entrenchments split and send those a bad incentives for the OEMs and building owners.
Uh, I wrote down lack of talent. And, or no, it talent organizational structure at someone, I think in one of your pockets, talking about the distance from buyers to users, which I think is relevant. Yeah. But I thought maybe just adding a perspective or two from my background in private equity, finance, and also being a student of business models.
Um, we talked about this some over time, but I want to amplify it, which is this idea that real estate is more of a debt instrument. A value than an equity instrument of value. And there is a difference, you know, the real estate industry has been around for a long time. Some could say it's the world's largest asset class.
our market alone is 40% of the real estate world. And I had a, a guy from, um, from Wells Fargo wants to tell me a pretty senior person that. The American real estate industry and all the ancillary industries as larger than the Chinese economy. So that may deserve some fact checking, but it's directionally correct.
And just says that that market it's an entrenched market and creating change in the space. You know, one of the core instruments for financing real estate is something called a bond, indenture bonds or debt, and debt is a dentist. It's a bond and interest. Are these extremely creating legal documents, basically set the rules in place for the duration of that bond or the debt instrument.
Can you, and I'm comparing that to real estate and basically that instrument, that bond indenture is a 20 page 40 page piece of paper. It's not supposed to be looked at unless things go wrong. What that means is everybody does the same thing for 20 years. Okay. So that is what the debt mentality is.
And that mentality exists everywhere in real estate versus an equity mindset. That's always evaluating risk and opportunities in real time. So being a, you know, risk adverse mentality or cost versus profit mentality. And I see that, everywhere, I'm, I've been surprised and I go to ULI a lot in how the leaders in real estate pay lip service technology, but they don't really understand it or have a vision for it.
It's just not the way they think.
James Dice: [00:09:24] and how do you, do you think that is shifting or is that
Shannon Smith: [00:09:28] well, I do think it'll, I'll be thinking about, do you think it will shift? I do think that the health of real estate organizations or any organization, frankly, when I was used to sit on boards of companies was, could be determined by its ability to accept, change and implement technology.
And now learned this from my investment background. what I found is a lot of real estate organizations are really aren't organizations. They're not run that way. Uh, there's tends to be a dysfunctional relationship between leadership and facility management. So the management is not sexy cost cutting, nothing to see here, run to fail.
You know, I've seen where some of these organizations, folks that lead it, they have a person that runs facility management. They call that person Bob or, or, Jean. and they know Bob and Jean do important things, but they really don't want to know what they do. Yeah. and that kind of lack of core to the, business model I think is, is absolutely one of the main reasons why were so far behind, you know, there's that Moore's curve of adopting technology and there's behind the laggards for all other industries is another Morris curve.
For adopting technology where the real estate and, you know, new adopters in real estate are behind laggards and everywhere else. I mean, that's sort of a view. Um, you know, so debt mentality, dysfunctional relationship versus equity mentality, and sort of a core healthy organizational structure are things that, to me are more systemic in nature.
Things that could change that really, um, I think are going to be the two things that threatened that model. Which is talent drain and tenant focus. And I think talent drain is a real problem that will ultimately affect these models in a downturn. Particularly a lot of real estate industries turned to cost cutting and fee-based businesses.
And the talent's not there. It's hard and that will get everyone's attention. And then, and then the new tenant focus that's been emerging, Around what tenants want. And even in our son facility management business, you know, we believe that you can actually customize a building to the tenants that are in it.
So we think that'll help. COVID COVID is a big deal. I think I was listening to an economist speak the other day, thought that COVID will impact us similarly to how the great depression impacted. You know, a generation of people's thinking. And so we'll see what happens, but for sure it didn't change history, it just accelerated it.
So I think these models, these two core systemic issues are, are gonna be important.
James Dice: [00:11:52] And what do you mean by the talent drain? Who specifically.
Shannon Smith: [00:11:56] Well, I think just, you know, senior techs, versus junior techs, the types of buildings that have to be, uh, manage the amount of time that it's available. Um, we're seeing our, our customers have an, a team and five C teams.
James Dice: [00:12:12] Got it. Yeah. And the team could retire
Shannon Smith: [00:12:15] at any time and it moves from product project to project. And when they bring the CT man, and then they have a lot of building drift, I know our software is a solution for that, so, well, let's get
James Dice: [00:12:25] into that. So what is point guard? Do you consider as a just software company or a services wrapped around it or kind of the
Shannon Smith: [00:12:32] tickets through it?
Yeah, well, sure. Well, you know, um, So we're, uh, a BMS overlay that you you've used that terminology, that uses sky Foundry as a core part of the, it's only about 5% of our code stack, but we have some seven key components to what we do.
We have energy, which is smart metering circuit, meter benchmarking, classic, you know, Stuff, uh, data onboarding is a part of what we do. And with prophesizing, a number of things there that I'd love to talk about. Okay. Uh, fault detection, around asset comfort, et cetera. Then we do the advanced diagnostics, which is some of the things that are important to you.
Like sensors we're, since they're compatible, we, do have some automated supervisor control and area that's really near and dear to my heart is our long-term capital and operating analytics, which is where we get into. Assets sensors and machine learning. And then the other two areas is workflow.
You've always said that's important. We thought it was too. We have workflow as well as some tenant management apps, like off hours requests. We have a product called Goldilocks and a few other things. So I w I don't like using the word platform because one of the things I'll tell you, Ralph top is it.
And I think you've had this debate on your podcast. That terminology is, is challenging. We're a tool. We're we're, uh, we're an important tool, for our customers and we, we try to meet them where they are, um, and what they need
James Dice: [00:13:56] refreshing to hear you say that. But we're platform, as people have heard me say was just so thrown around so overused.
So it's really refreshing to see you actually downplaying it a little bit. Uh, so thank you for that. so I'll kind of want to get into. I think you have some progressive views around analytics and you kind of agree with me. And a lot of my progressive ideas around analytics.
I think let's talk about though, maybe some like status quo, old way to do it. Sort of like what's the state of the analytics industry right now and maybe I'll, I'll kick us off. so I'm writing this piece right now and it'll be sending out to members before this podcast does just one, one day before.
Um, and the premise that I'm working around is like, we make a lot of promises about analytics, so predictive maintenance, we're going to digitize facility management, right? We're going to create X percent of savings. So some people throw around 20%. and I don't want to like throw that under the bus because I am.
Potentially the biggest believer in this topic. but I am maybe challenging the industry a little bit here in that how much of those promises are actually true today? Um, you know, 10 years into analytics becoming this thing that you know is generally accepted as a good idea. And so I'd love to get your thoughts around, like where we're at before we talk about kind of where we need to head, where are we at and what are some of like the misconceptions and the challenges with, with where we're at today with this.
Shannon Smith: [00:15:31] Well, there there's so many, I mean, people that listen to this podcast that have, you know, really amazing perspectives. I mean, my, my view coming at it, the way we described earlier, coming at it backwards, says a finance. We kind of woke up and said, Oh my God, there's a, there's an industry here. There's this work called?
Prop tech and CRE tech. And I call it the shallow Alto, uh, verbalization words that that are not very practical. I mean, we, we say our, our software is data that turns a wrench. You know, if you're not driving toward turning a wrench, which nothing gets happened in the building, unless a wrench is turned and if there's not ROI.
So we really focus on profit. Is this all about profiting businesses are about profit and the business of selling management is about. Turning a wrench. So I think words matter, I don't believe in transformation. I believe in enhancing. I don't believe in platforms, unbelieving tools. And I think the word you said, you're talking about there, it's oftentimes due to the shallow Alto where we tend to communicate where we want the industry to be versus where it actually is.
James Dice: [00:16:32] What do you mean by Shannon auto? Like as opposed to Palo Alto or do you mean exactly
Shannon Smith: [00:16:38] a venture capitalist? And heck I was in that, I was in an adjacent industry of that and, and, there are probably people that want to take business models from other places, other sectors of our economy and say, well, it applies here and let's use the same terminology.
And I think that that can be dangerous. Right. And then we overshoot, Oh, shoot. Where we really are in terms of our promises. And we then under deliver, we create false positives, false negatives, and then we lose credibility and it damages the whole industry. So I think that's just. And important, important thing.
James Dice: [00:17:14] if people talk about things like, as if the exist w where are we at? where's the market at right now? Uh,
Shannon Smith: [00:17:19] I think there's been some, uh, some acknowledgement that, um, well, first of all, I think there's way too much data. I mean, the customers are confused. I think you have like 160 folks.
On your list of, of no, I know one hand, you know, I, I was looking this up out of curiosity and, and right at the turn of the century there over, there were over 400 automobile manufacturers in the United States. Okay. So I think we're going to come to the same spot. Now. Now the choices are more reasonable, but I can't imagine, you know, how 400 cars you could choose from.
James Dice: [00:17:51] you mean at the turn of the century? The turn of the
Shannon Smith: [00:17:53] 20th century and the turn of the 20th century? Sorry. Yeah, yeah, yeah. As far as where it came along. So I, I think, um, I think there's a lot of customer confusion and confused customers don't buy as paralyzing. And you have everyone saying the same thing.
So some of these same words, some words that have been hollowed out and some words that don't apply to the industry. So I think we're at risk of doing that the same time. I'm super bullish. Uh, another issue that is out there that I would argue pretty strongly about. And I've heard some of the CEOs talk about this in a productive manner is there's too much data.
I mean, we're kind of in love with data and I agree that data has tremendous value and there's a lot to come out, but I really believe in the parades principle and, um, not all data is created equal and some data is good to have. And some really drives value. And we're trying to actually organize our user experience that were on our portal, where you can kind of get to the things you want quickly.
And then all the other data, you know, what category to put it. But when you open up some of these platforms and screens, it's this data overload. And we've seen that from our customers. This is overwhelming. Uh, what you created is a Cadillac product and, and what I need is a as a. You know, as as a Honda civic.
Yeah. And, So that's where we've had to move our product is so we have a monthly product now that provides one item that we automatically curate that we provide with a guarantee of, NOI or ROI on it, so that they'll never pay us more than they pay for this service. And it's very bite-size stuff.
And. And goes down to some of the things like what's, you know, switch did with her. I think DX product, we have something similar, those kind of bite sized products and value driven products where the data is. It's got a hard direct line to ROI versus data for data's sake. Yeah. It's something that we're dealing with.
And I think we're kind of sorting kind of chopping our way with machete out of those woods. Cause we all ran into it, screaming data, you know, machine learning and it kinda, we got confused and our customers got confused. I love it. I love it.
James Dice: [00:19:59] And I think that there's a lot there to be learned for a lot of the startups out there.
because you see a lot of their marketing around the finished product and I, I think eyes glaze over, I think yeah. Where we're trying to get to 10 years from now. Is autonomy. And if you work backwards from that, you're going to have some really cool product. But like right now, like you said, you're just handing one insight per month.
Like go fix this damper this month and then we'll talk to you next month. Like that's where the marketplace is today
Shannon Smith: [00:20:33] and yeah. And then, yeah, I mean, another thing to say there are pilots. I mean, pilots are, if you think about pilots, you tell me, okay, so I got to use this for a year or how long before I find out if it's worth anything, or you got a case study, which is someone else's building.
And we tried to re-imagine, we now do a 30 day snapshot and say, you don't, you don't have to hire us for a year just to see if this thing works. Hire us for 30 days and get it, make it less painful. I would encourage that, you know, the whole pilot land and expand, I do believe in that business model, but I also think it can be right-sized for the market retailers.
James Dice: [00:21:07] Yeah. And uh, I think something that complicates analytics deployments today is that when you have say per point and then volume pricing, The people that are doing the analytics project are a little bit incentivized to pull in all the data, get all the points because you know, you start to get volume.
It becomes cheaper per point, cheaper per system to do that, but really it's about tailoring that solution for the customer. So that that's sort of irrelevant what happens on the backend. I
Shannon Smith: [00:21:37] love that. Yeah. I mean, I, I, I think some of the conversations you're having about ontologies and all that are absolutely critical.
I mean, we're a haystack house, but we're, we want to talk about those things, but the customer is on a path and we, as our job is in this industry to meet them where they are on that path, you know, not to be yelling at them from the end of the path, telling them that they're losers, if they're not over here.
And, uh, and in fact that's what we call it, the point guard path. And we try to find those products and. And there are a lot of other good ones out. There are competitors that are offering similar, similar events. I think we're starting to do that more. Cool. Let's talk
James Dice: [00:22:11] about this need for consolidation. I didn't actually realize you had this private equity background.
So I've heard others talk about, um, you know, there's this whole S pack as a spec spec situation going on. Um, I just exposed my financial, uh, ignorance there.
Shannon Smith: [00:22:29] so.
James Dice: [00:22:31] I think there's a lot. There's a lot of people that think that there's a lot of consolidation opportunity in our industry. I think my vendor landscape backs that up, uh, with here's this list of 160 companies, you know, something like 80 of which, call themselves analytics companies.
Um, They can't all survive. They can't all. And, and to be fair, there are different verticals within there. You know, I have some that are focused on refrigerated, retail. I have some that are focused on XYZ vertical. Right, right. But for all intents and purposes, there's too many companies doing analytics.
So educate me around consolidation. Like, how do you think this is going to work? Uh,
Shannon Smith: [00:23:10] Yeah. I mean, like Island, this company, we have an amazing team, but I also know we have to look at where we sit in the, in the market. You have to look at it at what's a logical outcome for this space.
I do believe that there's a tension between point solution, you know? Well, let me first off, Sam's super bullish. Like I said earlier, there. 400 automobile makers at the turn of the, 20th century. And I think we're in a similar place in our industry. The market's in a very early stage and there is a big market out there and a lot of companies can survive.
And our break even is, is minuscule compared to the size of the market we serve. And even the size of the market here in the Southeast, where we're headquartered. So from that perspective is great, but the reality is. It is confusing. Right? And therefore is natural for us to be part of, um, people having a larger conversation where a convergence is one plus one equals three.
So for groups like us, which you put us in sort of an AFD, uh, maybe an ASC space where things were, where are logical a logical, um, partner to some seen the mess platforms. In fact, we're working with several right now in integrating with them or space management platforms. On that side, we are also working with controls system, vendors that more install our software in their, their control systems.
So th those are other channels where people are. Already in a conversation where they control the line of scrimmage with the customer and maybe provide less confusion to the customer and can then provide a more comprehensive solution. And I think all that's going to happen over time. And on top of that, there'll be some just straight inside our sector consolidation, which needs to happen.
But again, that requires some lack of ego, some investment mentality, maybe the equity mentality I talked about earlier. and when you have a lot of startups, everyone loves their baby, right? So it's kind of hard to, um, you know, drop them off at Kennedy, which is what were going to have to do over time.
And I do, I think that there are some consolidations happening. Um, I, I sometimes wonder if the sector focus, funds have been good for the industry or not. I think probably a net positive, but it does create. some fragmentation that may not be necessary. Totally. So, so I'm optimistic. I think, there's an increase of, of went from about 80 to a hundred deals broadly in our space, not just in the space, James that you speak to.
I think over the next two or three years, we should anticipate a lot of, a lot of consolidation and, and more, I would say strategic, intentional partnering, which we're certainly point guard plans to be a part
James Dice: [00:25:58] of. Yeah. There's a bunch of different types of consolidation, not just. Companies getting acquired.
Shannon Smith: [00:26:04] Yep. For sure. And I think that that is important. You know, one thing I'd love to, and just, uh, bring up with you that, that I don't see being talked about in our space, which I think could be an interesting conversation as a group to have, which is how we moved from being a vitamin to a painkiller. That's what I like to think about it.
Okay. and I think one path for us is. thinking about our industry more in terms of risk reduction, performance enhancing. Okay. So, and that's why I'm so fascinated why we got early on into moving into what our capital budgeting as a big area, because real estate's one of the only major, in fact, I think it's the last industry sector that doesn't use condition-based data for capital replacement.
it's a big area of opportunity because it embodies risk. And the 82% of equipment breakdowns are unplanned property condition assessments, which asset managers used and people use to plan out capital budgeting are useless for the most part. I mean, it's amazing to me, James, that when you buy a building a classic office building today, how little information from the BMS control system gets into that.
Report of risk and it's a dirty little secret about the PCA's and, and there are a lot of interests that could fight against that. But if you think about what's a PCA, a property condition assessment. Yeah. Okay. So I just feel like, um, where understanding what the analytics side, particularly BMS analytics has to say about risk in the building versus performance in the building.
And is, is, could be a place where this industry would grow. I mean, think about the property condition assessment industry yet industry is acquired by banks, insurance companies to buy buildings. So you have, it's a check the box. Right? Right. And so I think of it like the environmental, uh, risk business, where you have a phase one and phase two and a phase three.
Okay. So phase one is, is there anything to see here? And that could be something like our snapshot or some of these other products. Is there, is there a risk here in this building based on the real-time data coming off the control system, if there is second would be environmental phase two, and these are Googleable.
So the listeners have never heard of a phase. Two can go Google it, but that the phase two is then okay. Within this time to create a remediation plan, you know, and start to remediate. And then phase three and as a, how do we think cap it off? So that kind of compliance framework and risk reduction framework I think is actually available to us.
It's just not being accessed enough. you know, we've made some outreaches to insurance companies and lenders, but I think that there's is an opportunity for all of us to, consider that kind of conversation and it, and it does a number of things. It speaks the language of debt. Right. It, it moves what we do into a compliance framework.
you know, it, also opens us up to the core model of real estate, and to the leaders of the real estate industry, I think longterm and other people that haven't used this like asset managers and owners who don't actually think too much about what we do except for the leaders. And there are some great leaders out there.
I think all of us have customers who are leaders, but there's so many we don't have, which are followers and those or not doers at all. In fact, I had a, I had an asset manager of a very, very large company that you would know the name of tell him he had 50 asset managers and that for 49 and a half of them doing nothing was the appropriate course of action.
That's that's what we're dealing with. So I do believe risk, you know, when you start revealing how we frame risk, that's, that's an opportunity and I'd love to see it discuss more. Yeah.
James Dice: [00:29:48] This is something that when I just, you know, there's a like dead conversation happening, so. When the episode comes out, it'll be a week ago now.
But yeah, people are kind of, I think there's a misconception that analytics is a tool for the building operator. Um, which I'm not saying it's not, but I'm saying it's not an either or thing. I'm not saying we need to create analytics for the building operators only. Right. I think that something that you just spoke of is like, there's different stakeholders that can get value out of the same data.
And it's the analytics job. This is an appending that I'm developing analytics job to curate the insights for whoever's specifically logging in. Right? So the building operator might care about the broken bow, but the person buying the building. You know, tomorrow might care about, um, the history of that vowel over time and how many times it's required to be replaced, just making up an example, but they might care about their risk is what you're saying.
Um, for when that valve is going to break tomorrow, or how many valves do I have across this whole building that need to be replaced right now. and. What sort of tenant comfort issues are those causing that I'm going to have to deal with? Once I acquire this building, like those types of those are different insights for different people.
And I think that when I start to think about analytics 2.0, I'm starting to think about how our products need to start to mature so that they start to solve. Different problems for different people. It's not a narrowing. I don't think, I think it's an expansion, right? Anything.
Shannon Smith: [00:31:27] Yeah. I agree. You have your persona and then you find out how you can meet them.
On their path. I think, again, it goes back to language, for example, predictive and prescriptive analytics. Great term, love it, believe in it, but, but there's, there's already like problem sets that go well, before that, you know, on the capital budgeting side, and again, I want to keep stressing this capital piece equally or more important piece, our future, then the operating piece because it's a bigger number and it affects more stakeholders in the real estate ecosystem.
Hmm, totally. And meeting those personas, I mean, our cap ex is just, adding real-time data into an existing rubric for making capital budgeting decisions. You don't necessarily have to go all the way into prescriptive and using words like AI, you can say, take this data into consideration.
Do you have a, you have a willing audience for that. So, you know, you don't have to do advanced modeling and all this kind of stuff. This industry still run by Excel spreadsheets. So just have to remember that you have to fit into that environment and not, not another environment.
James Dice: [00:32:31] this is where you were getting at, you mentioned workflows and how I like to tie things to workflows earlier. So tying the new insight into someone's workflow is a step up from what a lot of people are doing on the analytics side. I think right now, the state of the art, if you will, on analytics, is that.
Saying here's this dashboard or here's this KPI, but what we were learning is like, we didn't have to go one step further and say, what persona are we effecting with that? And what workflow are we inserting it into? I think all the people out there applying the analytics, that's what applying. It means.
That's what human in the loop means is why, what human and what loop,
Shannon Smith: [00:33:10] right? Yeah. No, exactly. And we should be developing our product and look, we're not in, okay. We we've certainly changed. A bright, shiny thing here and there. And I'm probably in our team, the one most guilty of that. But, if your users are your personas, the people that you're, aren't driving your development and you're probably following a shallow Alto path that could, could get so far ahead of your customer, you'll never have one.
and that's important to where we're headed.
James Dice: [00:33:35] Hey guys, just another quick note from our sponsor nexus labs. And then we'll get back to the show. This episode is brought to you by nexus foundations, our introductory course on the smart buildings industry. If you're new to the industry, this course is for you. If you're an industry vet, but want to understand how technology is changing things.
This course is also for you. The alumni are raving about the content, which they say pulls it all together, and they also love getting to meet the other students on the weekly zoom calls and in the private chat room, you can find out more about the firstname.lastname@example.org lab. Start online. All right, back to the interview.
Shannon Smith: [00:34:10] Cool. So what
James Dice: [00:34:11] else needs to happen for this to go to mainstream? I know you wanted to talk about onboarding. Is that one of the, one of the topics you wanted to
Shannon Smith: [00:34:16] hit? Yeah, I've been encouraged by some of my colleagues in the space.
We certainly have begun to do more of this stuff, which is just, I call it a prebiotic, meaning that even like, even when we have our snapshot, which is a precursor to implementing the technology, we found that they're even smaller. Analytic, uh, prebiotics that you can put in your stomach to improve your digestion if you know that term you have.
Yeah. Okay. So it's just sort of like things that just kind of get everything ready to be digested and smaller bite sizes. So, The data onboarding, you know, you have teams just being helped with that. You have teams that may want a data Lake. I mean, people use the term digital twin, but we can provide things like that.
You have products that are cybersecurity scans, uh, you have products that do sequence of operations. That's all they do. Okay. Testing function products. So that again, it's just allows people to begin to build trust, to, to solve a direct problem. that is out there that that makes their lives easier.
And our goal is to help people make decisions, better decisions more quickly. I think, you know, it's not that fancy. It's not that safe. I mean, we're supposed to be doing as a company and helping them make money. Right. And so, um, those are, those are how we track orient our, our development, uh, turn. And I think that those things, the more we can help people.
Move on to the path, I guess, and not, you know, not just talk about AI and, you know, automated, um, Control, which I know you and I have gone back and forth that I said, sure, I believe that's gonna happen. Uh, I think we need to manage our expectations of the scope and window happened, but the building is fully automated.
It doesn't have a human involved is about as inevitable as a paperless bathroom. And, um, and so. Yeah. And so we just got to tone it down a little bit and say, okay, you know, and they're our customers is they're interested in some of that automated set point adjustment, but most are not. And most would just love for you to help them with sequence of operations.
And most we just help, like for you to help them with. So straightforward things and allows them to get their feet wet and move down that path. And I think those, those things could be helpful in our industry. Uh, again, guys, to your point platforms, yeah, the, the issue that, uh, the other issue is clearly this one of, of just speaking to each other and being able to.
Had these buildings that are more open, uh, that, that conversation I thought was fantastic. And we certainly fight that battle every day. And, um, really believe in some of these products that are out there. We have our own like Vultron, but ours is not in Python, but in Java. So, you know, we love this type of stuff that has to happen as well.
James Dice: [00:37:00] Um, It's funny. When you talked about onboarding, I thought you meant like these platforms, like you were just talking about, but you were also talking about kind of leading the customer into the path, onboarding them into this analytics journey. You know, we can talk about machine learning to onboard buildings really quickly and integrate, you know?
Um, but there's also, yeah, you're leading someone onto the path and there's always a first step. And I think what we're doing is skipping a lot of. Maybe easier for steps that could be getting people onto the path
Shannon Smith: [00:37:31] a lot. Yeah, I think that's, really important part of Lisa and you know, you and I were speaking beforehand, I feel like we've, we've learned this probably from making mistakes, not necessarily.
Cause we started, with, uh, a grand vision, but, it became pretty clear and I, unfortunately for me, we have some good mechanical engineers here who. When I would go to a conference and come back with these terminologies, they would just look at me and scratch your head and go, what are you talking about?
Yeah, we need that. They just say to me with Shannon, we need data. That turns a wrench. That's okay. I can go back to my desk, you know, but, uh, but it finally sunk in, you know, eventually I, I may be done, but I'm slow. And picked up on this and that, and now I'm up completely a believer in it. And then once I kind of began to put those lenses on, you begin to see, I don't necessarily think our industry is making like.
Fundamental massive errors, but I do sometimes worry that are, we can kind of get lost in our own conversations sometimes. And that, and if we're lost in that, our customers, for sure. Totally.
James Dice: [00:38:31] So something that I wanted to ask you about before we kind of get towards wrapping up, I wanted to ask you also about service contracts.
So it's kind of hand-in-hand with capital planning, um, again at different stakeholder, right? But same data that could be useful to a different workflow. Right. Uh, talk to me about what you're seeing in that area.
Shannon Smith: [00:38:53] We're, we're kind of new. Um, we believe this is important. We, have been working with outsource facility management groups and S guys. In fact, we just won a pretty big one with a large Sonia management company. Uh, yesterday, um, uh, 3 million square feet. But, the idea there is that they can use this to stay sticky. Uh, they can use it to prove their worth, which is oftentimes not completely understood.
Totally can use it to verify the, you know, their actions that one of the things we offer in our software is vendor verification, which verifies that the actions were actually the data supports that the equipment was indeed repaired. Um, And, it does allow them to re-imagine how they, negotiate and set up service level agreements.
If I, if I could come back and start a, a facility management company that was totally tech enabled. I mean, these companies do struggle because it goes against the sort of like someone that you're going to have to stop. Drinking, you don't really want to stop drinking like a beer or something like that, you know?
And so they actually have to, Oh, it's going to be good for you. And you'll like it when you're on the other side of it. And we've seen a few companies that have really embraced this and began to really think about it. But I would say the industry is still. And Mason, um, stage about how this can really help them.
And maybe you've seen something, James, I haven't, but we're just seeing that conversation start with three or four of our customers and we're encouraged, but we're not like, no, one's, you know, that was bought a new boat based on, well, I think,
James Dice: [00:40:27] I think it goes back to the vitamin or painkiller thing. I think if their competitors start to.
Create analytics driven SLS and starts to provide higher value and prove that higher value and potentially even have a higher return on the owner's investment. And then now they're competing against someone who's not, I think that, so Alex grace from clockworks. On episode four, call it the carrot or the stick.
Right. I think there's a potential flip that that could potentially start to happen. But this
Shannon Smith: [00:40:59] cupboard thing is true. I mean, I think Deb mentioned it in her, your conversation with her about. Yeah, we saw kind of the whole market taser for about four to six months, but this whole idea of remote work and a little more efficient on your truck rolls and the empty buildings, and yet you're still having to manage them.
And th those are the types of things where that's going to may take a year or two, but it's going to, it's going to affect facility management, I think for quite some time to come. Totally. And I think, I think our industry is well suited to meet those needs. As long as we talk about it in the right way.
Um, turn a ranch and make a profit. Love it.
James Dice: [00:41:39] Cool. Shannon. So a couple of things for 2021, I got like three layers of questions as we kind of look towards the future here. Uh, so number one, I want to ask you about COVID first. So, Analytics for COVID right. Is as something that I think is it's been talked about, but I don't know that it's really been celebrated enough.
So it's beyond just remote access, remote monitoring. So what else, what else is it and what are you excited about
Shannon Smith: [00:42:07] for them? Well, I think, I think there's obviously enterprise level value around remote building management, but if you're thinking about analytics for COVID and when we offer a building health check.
And then you sensors to help. And I think are that's a real opportunity to the extent that that's a real thing. I think that, uh, there's a lot of, um, confusion still in the facility management world. If you go on and places like that about really what's the best strategy for making, tenants or occupants excited come back into buildings, but, but having some benchmarking around that is important.
I had someone say everything starts with benchmarking and maybe that's another point to make having good benchmarks, even around the BMS are important and what's going on. And so building health is a benchmark and we can create that just like energy star scores. And so we're, we're working hard with products like that.
Um, and I think that's a real opportunity for our industry.
James Dice: [00:43:03] Yeah. And this is another area where I feel like There's some platform misconception because you have a lot of IQ companies, many of which listen to this podcast, but they're coming in. Not saying anyone's doing anything wrong here, but coming in and saying, here's my sensor.
I'm going to provide a vertical. Solution, uh, they're usually going to call it a platform, but it's basically a way for you to view that data. Right. And it's basically a new silo, right? Uh, it's a IAQ silo. Right. We had all these other silos and now we have another one. Right. and so how do you guys think about like, it's really, it should be start to be swallowed up by the existing overlay.
Provided in context with all the other data and then provide it into a workflow that you're already here. Yeah.
Shannon Smith: [00:43:45] I agree with that. And we, and look, I get it. And I do think sensors play a role in. Buildings that can't be retrofitted or are the smaller buildings in a 75 degrees might be doing stuff like that, but the BMS has already deployed since their system.
So why not first check that out? Right. And then that's why we just announced, uh, we have, we do sensors too, but we ha we have our own that We actually just buy and integrate into our data and workflow. But again, that goes back to the Pereda principle. You know, we look at the zone, dusty, we look at what the data is telling us where the gaps are.
That's what you deploy sensors, but you don't have to go beyond that. Now. you know, there may be some IQ, uh, density there around carbon that you might need more information on, but relative to COVID you don't. and so we're, We're interested to see how this plays out, but I think the BMS plus sensors is a more logical step and those three things being siloed.
And I think that's your point. Yep.
James Dice: [00:44:42] Cool. So my new, 2021 question is, uh, I know I skipped it earlier. Uh, so what's the number one thing you think needs to change to unlock the industry in the next year?
Shannon Smith: [00:44:56] I mean, I think we kind of covered it, you know, I think, Having real estate's business model be threatened by either talent or tenant is one.
And moving just from expanding our vocabulary from performance to risk is the other.
James Dice: [00:45:11] Love it. You, you cheated, you cheated, but I'll take it. I think, I think those are both great answers and unique answers too. Uh, so what are you excited about personally? What are you guys looking forward to rolling out in 2021?
Shannon Smith: [00:45:25] Well, we're w we're super excited about some of these integrations with the CMMS partners and the, and the controls partners, uh, these smaller bite-size products, our sensor product, and we will relaunch our Goldilocks product where the end of the year, which will be. Uh, it's sort of a dumbed down comfy where it's more of a placebo, thermostat, but allows tenants to basically customize their space and less facility management to, to respond to it.
So th those are some, some ideas that are way out there. And then we do, um, where do you think there's going to be some other types of, integrations, that we want to add? And, and we've been asked to put water in one customer lighting in another. So we'll, we'll play around with us, but the integrations are the ones I'm most excited about.
Uh, I think, and, um, and this insight product group I told you about, which is just the monthly one thing. We'll see how that goes. So.
James Dice: [00:46:19] Cool. Yeah. So integrating with more systems in the building, but also different cloud applications as well.
Shannon Smith: [00:46:25] We've got to join more conversations, you know, I don't know how many CMMS people are on, on your nexus pro, but there need to be more.
And how many in a space management folks, we need to be talking a little bit more broadly. I hope other don't get me wrong. I love Nexis pro, but I just think that that bigger conversations are probably better right now. Yeah. That's
James Dice: [00:46:44] something that a lot of members have expressed as well as the conversation and the use cases really are that we need to be providing you're growing beyond just BMS, beyond just HVAC, beyond just metering analytics.
Um, and I think Joe Gasper, Doni has said something along the lines of there being 30 different. Uh, IP connected systems in the building. And so there are, there's a network of professionals around each one of those silos that we as nexus, people hope to bring them into the fold. So, I think we should all be inviting them in, uh, um, certainly we're excited to meet them.
Shannon Smith: [00:47:18] well, yeah, we need, we definitely want to have more convergence. I think as the, as we move forward, I think that hopefully will happen more in 21 and 22. And you're beginning to see some of it already, but there'll be more more of it.
James Dice: [00:47:31] Awesome. Shannon. Well, thanks so much for, uh, come on the show.
Shannon Smith: [00:47:35] it. It's great. I love it. Love what you do and glad that glad to be a part of it. So thanks.
James Dice: [00:47:44] All right, friends. Thanks for listening to this episode of the nexus podcast for more episodes like this, and to get the weekly nexus newsletter, which by the way, readers have said is the best way to stay up to date on the future of the smart building industry. Please email@example.com. You can find the show notes for this conversation there as well. Have a great day.