Isaac Newton, the creator of Calculus, the three Laws of Motion and the Universal Law of Gravitation is perhaps the smartest man to have ever walked the planet.
What is less well known about him is that he was a keen student of Alchemy, the practice of transforming base metal into gold. Or rather attempting to, as it is of course not possible. However, that inconvenient truth was not taken as proof that it was not possible. Instead a rather clever justification for failure was developed, that Alchemy WAS possible but only by someone who did not WANT to do it. If your interests were as base as greed and lust for gold then you did not deserve to learn the secret.
And much the same applies to people looking to monetise data from Smart Buildings, a subject I keep coming across in the world of PropTech. Ah, they say, data about your buildings will be worth more than the building itself. Buy our software and you can perform alchemy. Mountains of gold are there for the taking.
Well sorry to disappoint you but if it foiled Newton, it will definitely foil you.
The rise of Ad Blocking, the software that does what it says on the tin, shows us why. More than 400 million people have so far installed ad blockers, the majority on mobile devices. Why? Because people hate being harassed online, virtually stalked by re-targeting from advertisers that have been painfully slow to grasp just how much their would be customers have come to dislike them.
If all you want to do is monetise data about your customers (people who work in or visit your buildings), or sell ads based on data about them, you will not get very far. In fact you will damage your brand, and whilst not many people in real estate realise the importance of brand, that is a very bad thing to do.
So what is the answer, how does one monetise data from Smart Buildings? The answer lies in the twin trends of the move from Products to Services and Ownership to Access.
Increasingly we are living in an almost post-consumer world where we are less bothered about acquiring more ‘stuff’ and more interested in being provided with services, experiences and ephemeral pleasures. So Uber instead of Cars, Spotify instead of CD’s, Netflix instead of DVD’s: on-demand this, on-demand that. Why bother to own something you seldom use, that becomes out of date rapidly, or that you really cannot afford. Rent what you want, when you want it.
And Real Estate is not immune from this trend.
In fact the Real Estate business is no longer about Real Estate, or soon won’t be. Just as it is now easy to buy almost any Software as a Service, so it will become with real estate. Space, as a Service, is the future of real estate. On demand and where you buy exactly the features, and services, you need, whenever and wherever you are.
And when you become a service provider, rather than a rent collector, what will be your differentiator? It will be your brand, and your brand will grow out of the user experience you can offer your customers. And that user experience will be dependant on data, which is where we start to find the way to perform real estate alchemy.
How come? It is because data is the fuel you need to do the two things that will underpin a great user experience for your customers, and those are the ability to remove friction and enable discovery.
Now friction is anything that makes it harder than it need be to do anything. Friction is what makes life a pain. Often these are small things, but we all know that it is often the small things that are the most annoying. They are the things you have to do when you’ve got other things to do or the information you need to do something else. So one would use data to remove this wherever possible. Armed with real time data about temperature, humidity, air quality, light levels, motion, presence, location etc there are myriad frictions you could make disappear. And every year new sensors arrive on the scene, and in each one is a new business model. You just need to connect the dots; if we knew this, what could we improve?
Whereas removing friction principally deals with everyday pains, enabling discovery is all about gains, the fun or enjoyable things you can offer your customers. Connecting the dots again; if we knew who was visiting us, and when, and we knew all about ‘the space around us’, then how could we make visiting us a more exciting, pleasurable, or just more convenient experience.
This is all a mindset. One where building value depends on building a brand, and that in turn involves thinking about all the ways you can enliven or animate your physical spaces through a better understanding of ‘the digital layer’ that sits on top of it.
Now, going back to Isaac Newton and Alchemy, there was a magical ingredient that alchemists believed existed that would make turning base metal into gold possible, and that ingredient was known as The Philosopher’s Stone.
It would be the ultimate monetisation machine.
Your Philosopher’s Stone IS data, but you need to use it in the right way.
This first appeared in Estates Gazette on 7th October 2016.