3 min read

Did you say FREE? [Nexus Newsletter #122]

Hey friends,

In last week's newsletter, I shared an article titled “Give it away, give it away, give it away now”. That same day, I serendipitously met the author, Rick Zullo of Equal Ventures, at a happy hour in NYC.

Because I have a knack for saying awkward things at social gatherings, I told Rick the article wasn't funny (as he had hoped) but it was damn sure insightful. If you haven't read it, allow me to quickly summarize...

One of the biggest inhibitors to the digital transformation of legacy industries (like real estate) is the willingness to pay for software. Since legacy industries are largely devoid of software, the procurement behaviors, budgets, and pricing expectations for purchasing it are non-existent. This produces situations where the benefits of technology deployments vastly outweigh the willingness to pay and customers irrationally forgo amazing ROIs.

Rick recommends responding to this situation by giving the software away for free, removing buying friction while simultaneously counter-positioning against incumbents and future competitors. Obviously, the technology vendor must then find an alternative business model to capture some of the value it creates.

While Rick's playbook is more common in the broader tech world, it's difficult to understate how rare this is in smart buildings tech. Looking across the Nexus Vendor Landscape—now at over 350 companies—it's mostly all software-as-a-service models: $/square foot/year, $/building/year, or similar.

The one exception I can think of is intentionally running Rick's playbook: David Energy. They give their energy management software away for free and monetize as the building's retail power provider and through shared cost savings.

The smart buildings industry doesn't seem to have freemium models like Spotify, platform models like the App Store or LinkedIn, open source models like MongoDB, transaction-based models like Stripe, pay-as-you-go models like Twilio, etc.

Why not?

What do you think the obstacles are?

Let me know on LinkedIn!

—James Dice, Founder of Nexus Labs

P.S. Speaking of David Energy, you may have seen that Nexus Labs invested in their recent $20M Series A alongside Keyframe Capital, Union Square Ventures, My Climate Journey Collective, Equal Ventures, and more. More to come on that soon! While I'll always continue to disclose all of our conflicts of interest, our very small investment didn't bias this newsletter... David Energy is literally the only example I know of. I'd love to hear and share more!


✖ At the Nexus

Here’s everything worth sharing from Nexus HQ this week:

★ PODCAST: 🎧 #095: Antony Slumbers on what it means to own a smart buildingAntony Slumbers is the Co-Founder of Real Innovation Academy and is a real estate innovation thought leader at antonyslumbers.com.

We started with his background founding one of the first occupant experience software companies back in 2001 and followed his illustrious career that eventually saw him coining the term, "space as a service." We unpacked what that phrase means in light of COVID, where sustainability and decarbonization fits, and finally, what a smart asset means in this context.

I loved this conversation because it puts technology in its place - we should be asking ‘technology for who? and for what?’. This answers it.

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★ MEMBERS-ONLY EVENTS THIS MONTH:

  • Subject Matter Expert Workshop: The co-Founders of LogCheck (acquired by Building Engines last year), Mike Brown (Pro Member) and Ben Ragheb, will present on building operations, the problems LogCheck solves, and their experience starting and selling the company.
  • Member Gathering: The panel for April's Pro Member Gathering is made up of Pro members Alec Manfre, CEO and Co-founder at Bractlet, Christopher Naismith, CEO at Audette, Matt Brown, Founder & Head of Product at Simuwatt. They will chat with the group about digitizing the decarbonization project development process.

Join Nexus Pro now to get the invites and access to the recordings.

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★ ON LINKEDIN: Fun to host so many industry leaders last night to brainstorm about decarbonization in real estate...

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★ READ OF THE WEEK: A deeper dive into 24/7 carbon-free energy

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