Essential tech for real estate: Books

June 2015

No tech will ever kill books. The paperless office is at last coming to pass, mainly because of the prevalence of tablets and online data, but with even Mark Zuckerberg running a book club, those wonderful physical objects are here to stay.

And there are some great books to help you speak digital. For me Nicholas Negroponte’s 1996 Being digital was a clarion call, and last years Zero to One by Paypal founder Peter Thiel is great on what it means to think big in a digital world.

Thomas Davenport’s Predictive Analytics is very good in explaining why this is a fast growing technology, with great potential in Property, as is The Signal and the Noise by Nate Silver.

Hooked by Nir Eyal explains how to make products that are addictive and The Hard Thing About Hard Things by Ben Horowitz is a cracking tale of managing a digital company.

Business Model Generation by Alexander Osterwalder will help you appraise whether your business is well positioned in the marketplace and Exponential Organizations by Salim Ismail & others will give you endless ideas about how that position may change.

Smart Cities by Anthony Townsend & Triumph of the City by Edward Glaeser are both good on this huge and important topic.

And if you only read one book in this list make it The Second Machine Age by MIT’s Erik Brynjolfsson and Andrew McAfee. If that doesn’t get you fired up about becoming digital nothing will.

Antony

This first appeared in Estates Gazette on the 13th June 2015

You don't need to code but you must speak digital

June 2015

We’ve just had an election during which digital technology was barely mentioned. Almost all debate was anchored in last century analogue thinking. So it is no surprise that the Digital Skills Committee have just released a report saying the UK is at a tipping point and urgently needs to improve the woeful levels of digital skills available amongst the workforce. As they report, 35% of UK jobs are at risk of being automated over the next 20 years and we need to create new, digitally enabled, work to replace the 10 million plus jobs that this represents.

You’ve probably heard it said that ‘we all need to be able to code’, and that you can learn to build an app in a day. Well, sorry but this is nonsense and misses the point about the skills that are needed NOW in the workforce. It is a good thing that coding will be part of the national curriculum but apart from the time it is going to take to teach the teachers, it is going to be at least a decade before these students leave school. So between now and then what are we going to do? Should we all be enrolling in coding classes?

The answer is no. You no more need to learn to code than you need to be able to build the engine in your car. But you need to be able to drive and you need to understand the vocabulary of, and speak, digital.

There are few areas of your business that will not benefit from, or be changed by, digital technologies. Whether you are dealing with internal staff, or suppliers, or partners, or customers you need to be thinking about the digital skills and tools that can make your operations not be 10% better, but degrees of magnitude better. So you need to think how technology could enable an entirely new, transformational business model (think Uber vs Taxis, or Hilton vs Airbnb). How you could improve the user experience and user design of every touchpoint with every stakeholder. How you could apply predictive analytics to the big data you are now able to capture, and how machine learning might enable dramatically more efficient processes.

And throughout your company everyone needs to be able to engage fully with digital technologies. So all should learn a dozen key HTML tags, how to use Google Docs, become adept at search, to understand the value of social media, and new channels to market. And with online marketing being so important, how to write quality copy, how to find and manipulate imagery, run a podcast, shoot a video, and analyse website traffic. And so on.

We are front running the robots. Speaking digital is the key to staying ahead.

Antony

This first appeared in Estates Gazette on the 6th June 2015

2023: The Future of Real Estate

May 2015

I’d like to suggest to you that, by 2023, “The Office is Dead*”.

Now before everyone screams ‘don’t be ridiculous’ I want to be clear;

I do not mean there will be no more offices. Nor do I mean that what is coming applies to every company in every office. A large chunk of the market will stay pretty much as it is. But an even bigger chunk will not.

I am well away of the supply and take up figures for office space and have eyes in my head so can spot a crane like everybody else.

But regardless, my position is that large scale change, in how we work, and the work that we do is coming and that it is impossible for this to not be reflected in how we use real estate.

My contention is that the real estate business is no longer about real estate.

It is no longer about a roof over our head, or a place to work. Instead, because of technological developments, and the behavioural changes that will follow in their wake, the point of the real estate industry is changing. What will be demanded of the industry, and the product the industry is going to need to supply, will become very different from what it is now.

And some will adapt and build great brands (and yes, in this world Brand will have considerable value) and some will not.

So how well do we do, as an industry now? Well not that great.

Office desks are occupied roughly 40-50% of the time. And according to the Leesman Workplace Efficiency survey some 47% of people say their offices aren’t conducive to productivity and 77% of employees claim to be poorly or partially engaged at work.

Obviously this is not only a real estate issue but it does rather reinforce the thought that things as they are are not that great.

So, we need something better. But just improving what we’ve done before is not the answer. Because we don’t need real estate anymore for what we used to need real estate for.

So we need something new.

Marketing guru Seth Godin wrote this as part of a blog post in 2010 – and it pretty much reflects the property industries default, defensive argument when discussing offices.

Why do we need offices?

• That’s where the machines are.
• That’s where the items I need to work on are.
• The boss needs to keep tabs on my productivity.
• There are important meetings to go to.
• It’s a source of energy.
• The people I collaborate with all day are there.
• I need someplace to go.

We need to ask ourselves. How relevant is this today? Let alone in 2023.

Why 2023? Because it is eight years hence and as likely to be as different from today as the world was eight years ago.

This was the biggest selling phone the day Apple launched the iPhone.

The Motorola Razr.

People loved this phone.

Until they didn’t.

5.4 million iPhones were sold in the first year.

61 million sold in last three months.

Other things were different just eight years ago

Facebook had been open to the general public for 1 year and had about 20 million users. Amazon web services was 1 year old. Google’s streetview was only in five US cities and Chrome was yet to be launched. There were no Google Docs. Blackberry shares were $230. Nokia had a phone market share of about 50%. Kodak and Blockbuster were going strong. As indeed was Lehmans. Twitter only launched in April 2007 and Tumblr in February. LinkedIn had just 7 million members against some 350,000,000 today. There was no Instagram, WhatsApp or Snapchat.

Effectively hundreds of millions of people spend their time today doing things that simply did not exist 8 years ago.

So let’s go forward, to 2023, but let’s speed things up. Let’s go exponential.

This is the famous hockey stick – the proxy for Exponential change.

For a long time growth is flat and then bang, you hit the corner and things take off.

In many areas of technology we are just hitting that upswing.

And this affects….. Everything.

All of sudden, change, and progress, becomes much faster.

That’s how you go from selling 5.4 million iPhones in a year to 61 million in 3 months.

The smartphone industry hit the upswing in the hockey stick several years ago and growth has been, and continues to be, exponential.

Thanks to ben-evans.com

Five years ago PC’s were the leading computing device, and roughly 1.6 billion people upgraded once every five years. Today about 4 billion people are upgrading their phones every 2 years.

This year, for the first time, over 1 billion smartphones will be sold.

The prevalence of large screens, with even Apple giving in and producing the 6 and 6+, means more and more people are looking to their phones as their primary, or close run secondary, computing device. Research has shown that people spend almost half their entire day interacting with one screen or another.

And this change in consumer behaviour (which includes business behaviour as it is employees who are fundamentally driving this change rather than management) is leading to profound changes in how the software industry is addressing product development.

This is a forecast for how the world will look in 2017.

Population up a bit, adults and literate adults up a bit. There are no more PC’s than now but a lot more mobile phones, even more tablets and a massive increase in the number of smartphones.

Mobile is eating the world. It is vital to stop thinking of physical places as somewhere people have to go to – offices for instance. You don’t need a place to have purpose.

This charts clearly demonstrates how the tech landscape has fundamentally changed.

Thanks to ben-evans.com

Just 5 years ago – yes FIVE years – Microsoft had over 90% of the market for connected device sales. Pretty much every computer ran on Windows.

But today, that share is down to 20% or so. And dropping. Google’s Android and Apple’s iOS power over 96% of mobile devices.

And due to the equally exponential increase in power, these mobile devices are effectively the equivalent of 1990’s supercomputers.

In our pocket.

It is no longer a Microsoft controlled world. Even the workplace is about more than Microsoft.

The world has changed. In just five years. Give it another five years and today’s fifteen year olds will be entering the workforce.

And they use technology completely differently.

Thanks to ben-evans.com

Note how little they use the telephone and email; that technology is for grandparents.

Replaced by social networks, messaging and photos.

WhatsApp has 750 million monthly users, Facebook 1.4 billion, and the likes of Twitter, Snapchat and Instagram hundreds of millions as well.

The way we work, how we communicate, with each other and with our partners, suppliers and customers will change. Soon. And rapidly.

It is no wonder that Slack has become the fastest growing business application of all time. Just imagine, the end of email is nigh.

Storage is expanding rapidly. Here we have, on the left a 128 megabyte micro sd card from 2005 and on the right, nine years later, that has become a 128 gigabyte card.

So a 1000 times improvement in 9 years.

But the increase in storage size is getting even faster. Here is the 2015 version, just one year later.

200 Gigabyte. 56% bigger than a year ago. Can you imagine where we’ll be in eight more years?

Computer processing power has followed Moore’s law for 50 years now. Transistors doubling every two years.

And note of course that the vertical axis is logarithmic.

We’re currently at the level of a mouse brain.

The Economist wrote last week that maybe Moore’s law is ending – but not because it is running out of runway. No, the issue is power efficiency. It might prove more effective to parallel process farms of chips than speed each one up.

Either way, we will continue to have more and more pure computing grunt available in the years ahead.

And this is the Solar market.

Prices collapsing – demand soaring

That graph is Economics 101 isn’t it?

You may have seen, and if you haven’t I heartedly recommend it, Elon Musk launching the Tesla Power Pack last week. A hang it on your wall way for anyone to locally store solar power.

How far off are we from commercial properties being run on solar power.

Look at that graph.

Similar applies in the world of Cloud computing.

If ever there was an exponential business, this is it.

This graph shows the growth of Amazon’s cloud business.

In July last year Amazon did a $600 million dollar deal to be the cloud infrastructure for……….. the CIA.

So, when I am told, as I was two weeks ago by a senior lawyer, that ‘we don’t use the cloud because it’s not secure’ i think ‘Why do they think that?’ and ‘How long is the firm going to be in business?’

Many of the fastest growing companies in the world live on the Amazon cloud – Pinterest, AirBnB, NetFlix, Dropbox.

To a large extent the Cloud is where your business software has either gone, or is heading.

And that is a good thing.

Just imagine, no more server rooms, and anything you need available anywhere you are, anytime.

And then, Broadband

Look at this image of an internet speedtest result.

Nearly 1000 mb downloads and 350 mb uploads

Where do you think this happened? No, not TechCity – which famously has pretty rotten broadband, but on a farm in rural Yorkshire. It was installed by the wonderful people at Broadband for the Rural North. Fed up with waiting for BT to install any decent connectivity this is a group of people who clubbed together and did it all by themselves.

Meanwhile, as Ofcom reported the other week, in Cowley Road, Brixton residents luxuriate in the slowest broadband speeds in London, just 1.41 meg.

Broadband is the infrastructure of the 21st economy. We have a government that PR spins about ‘superfast’ broadband rather than get on and ensure we all have what is needed, but I am going to, as an optimist, work on the basis that this does get sorted out.

It is vital to the success of the whole economy.

So let’s hope for ‘fast and getting faster.

Same with the Internet of Things. CISCO (who are admittedly biased) suggest that 50 billion objects will be connected to the Internet by 2020 – but that is only 3% of ALL the things that could be connected. So maybe they are underestimating growth?

The key point though is that real time data will be available from most things where there is a value to that data being available in real time.

And then throw in processing this data through predictive analytics and machine learning and we will have a much more controllable built environment. And by being more controllable we can optimise it. To make life better for more and more people.

Today real estate is pretty dumb; in eight years it’ll be pretty smart.

And this exponential growth applies to 3D printing, Drones, 3D Lidar sensors (the type that are used in self driving cars) and industrial robots.

Everywhere you look speed is increasing, functionality is mushrooming and prices are crashing.

Have you seen these telepresence robots from a company called Double robotics?

You pop in a tablet and then, controllable from your laptop or phone, you can whizz them around a remote office, or factory. Or wherever.

Is it as good as being there? No. But it’s not far off.

Tech is not like the wider economy. It develops exponentially, not linearly.

Put it all together and what do you get?

A world where we should be looking to be 10x as productive, not just 10% better.

A world where routine work will be automated. You won’t be gamifying dull work, as dull work can be codified. And if it can be codified it can be automated.

Reporting will be realtime – every data source will have API’s, so mixing and matching information will be easy.

No more monthly report creation. There is much talk today along the lines of ‘I can’t do that on a tablet, I need a proper computer’ Well that will mostly disappear as processes are redesigned, digitised and repurposed for this new world. Those things you can’t do on a tablet will, in most cases, become things you no longer need to do.

Data will be contextual. I.e what you are presented with will reference where you are and what the time is. This will remove a ton of friction in so many applications. No more drilling down.

And ‘Everything’ will be available as a service. All your applications will be cloud based and you’ll have access to just about anything you need via a multitude of software, data and infrastructure as a platform companies.

And none of this requires an office. Mostly this is work being done by software.

And new types of company will emerge, with new business models, that allow them to remain ‘lightweight’, despite scaling up to the global level.

For example

• Uber owns no cars
• AirBnb no rooms
• Facebook creates no content
• Alibaba has no inventory
• WeWork owns no property (despite being valued at $5 billion)

And likewise, these new companies don’t employ that many people.

• AirBnB has 2,500 employees whereas Hilton 135,000.
• Facebook has 10,000 employees to handle 1.4 billion users.
• Uber has just 2,000 employees to support a $40 billion valuation.
• WhatsApp was bought for $19 billion when it had a paltry 55 employees.

So yes, I am aware that these companies are taking a lot of space, all around the world, at the moment. But compared to their capitalisations, really not so much. And anyway, to an extent they are outliers, the unicorns that are so rare as to be almost mythic. Most tech companies really don’t need much space.

Because whilst we tend to think of big companies when we think of the office market, most aren’t big.

In fact most companies, whether tech or not, are small:

The City of London produced a report, which they launched at MIPIM in March showing that, in the City of London

• 98.6% of companies are SME’s with fewer than 250 staff.
• 80% have less than 10 employees.
• Only 205 firms in the City have more than 250 employees.
• 72% of occupied units are less than 10,000 sq ft.

These types of firms are almost guaranteed to be using less space per person in the future, regardless of how technologically savvy they are.

This is the age of ‘spaceless growth’.

And that is before you factor in the rise of ‘contingent workers’, those who are self employed, or consultants, or contractors.

I do not have the UK figures but the recent Intuit 2020 Report stated that In the U.S 40% of workers will be ‘contingent’ by 2020.

So, in this world, what is the point of the office?

Extrapolate all this technological change through to 2023 – what then?

Let’s reprise Seth Godin’s points about the point of the office:

• That’s where the machines are. NOPE – the machines we need are with us all the time
• That’s where the items I need to work on are. NOPE – they are in the Cloud
• The boss needs to keep tabs on my productivity. NOPE – you’ll either have no boss or that type of boss will be history
• There are important meetings to go to. YES – but I seldom need an office to connect with someone
• It’s a source of energy. YES – but in this new super connected world there is plenty of energy elsewhere
• The people I collaborate with all day are there. NOPE – The people you collaborate with are all over the place.
• I need someplace to go. Well perhaps you do.

But clearly you do not need the office for what it is used for now. Or rather, by 2023 you almost certainly won’t. The purpose of the office is set to change, Quite dramatically.

But there is also a dirty little secret that your company does not tell you……

And that is that, as Bill joy who founded Sun Microsystems said:

“No matter who you are, most of the smartest people work for someone else.”

Marc Andreesen, the renowned Silicon Valley VC was recently quoted as saying that we should remember that “95% of the best coders don’t live in Silicon Valley”

It really is time we embraced the Global Village

It is pure luck that most people live and work where they do – it is time to harness the skills of everyone. Not just the geographically lucky. Great companies like Automatic (the makers of WordPress that powers some 40+% of all websites) are, and have always been, totally operated on a remote worker basis.

Maybe that’s how they get some many great people to work for them.

And there is more of this type of behaviour than one thinks already. According to workplace insights “1 in 5 workers across the EU now spend at least ten hours a week working remotely. And more than 50% of Generation Y employees believe they would be more productive if allowed to work more flexibly”.

And it is already clear where this is heading. The Leesman Review said last month

““So the big and bitter pill for many to swallow, is that the desk is no longer the epicenter of productivity. Instead, the highest workplace effectiveness results are achieved through infrastructures and systems that facilitate collaboration, sharing knowledge and exchanging ideas, done in a variety of different settings, most all of them away from a designated desk.”

So YES – The office, as we know it, and how it works in so many companies, is dead.

Welcome to The Imaginarium

A place where we go to do what computers can’t.

Unlike today’s typical office, which is jam full of people in environments suited for doing work that will be redundant in the near future, this is a place where we will go to do the opposite:

• Design
• Where we use our Imagination
• Somewhere that inspires us
• A place for Creation
• A place where empathy abounds
• Where Ingenuity and Innovation is what matters
• A space for Collaboration

And somewhere to go – whether virtually through social media or actually, in person – for all of the above.

The Imaginarium is where we will go to:

• Create new products
• Define the work we want the computers and robots to do
• Make existing products better
• Create experiences (the key, rather than money, to happiness)

And we will need this Imaginarium because without creativity we are in trouble: Nesta published a report a couple of weeks ago entitled ‘Creativity vs Robots’. It stated that 47% of US jobs and 35% of those in the UK are at high risk of computerisation. However those jobs that were creative had an 87% chance of not being replaceable.

Being creative gives you the highest chance of avoiding being replaced by a robot.

24% of UK jobs can be deemed creative. We need more.

Now, three factors determine the chances of replacement by new technology.

• Uniqueness (innovation) – how novel is the work you do? How repeatable?
• Social intelligence – does you work require social intelligence?
• And whether or not you have the ability to interact with complex objects in an unstructured environment.

To make the most of these, and to encourage and grow these skills we need new types of spaces.

YES We need Imaginariums not offices and the future of real estate is in providing them. The industry needs to get its head around a changing world, with changing demands, and changing pressures.

Truly the real estate industry is no longer in the real estate business. It is in the imagination business, the world of inspiration and human genius. Its business is in enabling us to excel at what we are good at. To create intensely human environments that are technologically advanced but deeply focussed on us, the people who need to be our best to remain in control of our own destinies.

So in summary:

By 2023 the world will be very different, as today is very different to 2007.

The robots will have taken many of our existing jobs

And

Technology developments will have redefined much of the work we do today 

In 2023 the creative class, in the three senses defined earlier, will rule the roost.

People who can do what computers can’t.

Today our offices are largely fashioned around Industrial Age thinking, obviously with many exceptions. But by 2023 we will all be deep in the digital age and the spaces and places we will require will be very different.

It is critical to not think of the future as a digitised version of today. Or real estate in 2023 being just an iteration of what is prevalent today. It won’t be.

Use your imagination and create something better.

The office is dead – long live the Imaginarium.

Antony

* The caveat of course being that we need to add “as currently used”

This is a variant on a presentation I gave to the Fresh Opinions Property Networking group and to Capita Real Estate during the second week of May 2015.

Is the real estate industry really about real estate?

May 2015

Yes I know; you’ve heard it all before. The office is dead. Yawn. They’ve been saying that for twenty years but here we are in 2015 with office demand on a roll.

Well sorry, but Ernest Hemingway had it right. “How did you go bankrupt?” Two ways. Gradually, then suddenly” he wrote in The Sun Also Rises. And the office market will be hit in just the same way.

Over the next 5-10 years perhaps 40-60% of companies will find they no longer have a need for offices as we use them now.

We tend to think of big companies when we think of offices but the reality is, most businesses are small. The City of London issued a report at MIPIM showing that 98.6% are SME’s, and 80% have fewer than 10 employees. There are just 205 firms in the City with 250 or more employees. 72% of occupied units are less than 10,000 sq ft.

Now factor in the rise of ‘contingent’ workers (part time, contractors, self employed) whom in the US are expected to be 40% of the workforce by 2020.

Now add technological change to the mix and bang, it hits you like a brick; what is the point of a conventional office for this type of worker?

They don’t need an office to access their computer. Their works files are no longer in the office. They likely don’t have a boss who cannot function unless they are in line of sight. They don’t have big company bureaucratic meetings. And most of the people they work with are ‘somewhere else’.

So why on earth do they need the cost of an office and the daily inconvenience of getting there?

The answer lies in what it is that we humans can bring to the party, when the party has been automated and robots are everywhere.

Make no mistake, everything that can be automated will be. If you can codify it, you can automate it. And will.

Which brings me to The Imaginarium, which is what will replace the office for many. This will be a place, a space, that allows, forces even, humans to do what computers can’t. And that is: to define, design and refine the world around us. To imagine, inspire, empathise, innovate, be ingenious and creative.

The real estate industry is moving beyond real estate. We do need to congregate, we don’t need offices. It’s ONLY as an Imaginarium that the office retains value. That providing the toolset, physical and virtual, to enable people to unlock their creativity is their purpose.

People can and will work anywhere. And for much of the time they can, in fact need to, do this alone, in peace, and at maximum concentration. But creativity, without which your future is bleak, requires regular doses of collaboration with other creative people, in spaces that inspire.

We all need inspiration. We no longer need an office. The real estate industry needs a new product.

Antony

This first appeared in Estates Gazette on the 9th May 2015

When physical real estate isn't enough

Anyone involved in real estate should take note of the Amazon Dash Button. This little physical object, not much bigger than a USB memory stick, is a harbinger of huge change, and a stroke of genius.

Place it. Press it. Get it. That’s the line from Amazon. Stick a Tide dash button to your washing machine at home and when you’re running low just press it and bingo, a replacement will be on the way. Exclusive to Prime members it brings the ease of one click ordering to the real world. Bounty, Olay, Huggies, Gillette – think of a brand that you buy regularly and then think how easy this makes replenishing your stocks.

Then take it a step further, as they say they are. How about a washing machine with this functionality built in? Or a coffee machine that prompts restocking as the beans run low?

And then go one more step. What if this little button becomes even smaller and just ends up as a sticker, and the one press ordering option becomes a standard feature of any ‘consumer packaged good’? Then, instead of visiting the supermarket you simply tap on your product of choice to re-order. How about that for friction free capitalism?

And that is the point. The Amazon Dash button is an indicator of what becomes possible when you add a digital layer to the physical world. It shows how the physical world can be aligned with our digital lives. How making the physical world ‘smart’ can improve our lives.

In the real estate world we try and build physical spaces that transform the emotions of the people who use them. We aim to create environments that people enjoy being in, that make them happier, or more productive, or more relaxed, or more excited. Or any combination of emotions. But to date, these environments are dumb. They are simply what they are, lumps of concrete, or stone, or steel or glass. What we need is for these spaces to become smart, to offer up information on ‘the space around us’.

As the washing machine with a dash button prompts you for a refill, so in the workplace the same intelligence could apply. The meeting room should know it is not booked, the reception barrier should know you are allowed through, the air conditioning unit should tell you it’ll break down in five days and the lobby should tell you (as you like classical music) that there is a recital starting at 1 O’clock.

And then in retail a whole host of technologies are coming available that make the experience of shopping so much more pleasurable, entertaining, informative and rewarding. For it is becoming ever more true that in the same way we don’t need an office to do our work, we don’t need a physical shop to do our shopping. Only if the employer, or the retailer, can add another dimension, and provide something only available in the office or in-store will we bother to go there.

So whilst the retail industry believes it has found a saviour in ‘click and collect’ (especially in the UK but increasingly in the US) and one often hears talk of ‘I told you so – you need shops’, dash button type technology argues against complacency. Whilst variants could help make in-store shopping more enticing, this technology could enable people to luxuriate in the convenience of not having to schlep to the store.

When my home becomes smart enough to give me whatever I want pretty much on demand, why should I visit a store? The answer of course, is that a great store, with great merchandise and a rich digital layer, is the ultimate shopping experience. And a great office, full of bright, engaging and engaged people, is the ultimate work environment.

But the bar is getting ever higher. As life becomes more digitised, unless your space is great, it simply won’t be required. Physical real estate, without a digital layer, is dumb; and dumb isn’t enough anymore.

To the digital, the spoils.

Antony