#PropTech resolutions for 2017

December 2016

At the beginning of last year I wrote an article, “It’s 2016 and you need a Digital Strategy”: people who already had a Digital Strategy responded favourably, but elsewhere it was largely ignored. More was written and said in 2016 about #PropTech than ever before, but in the industry at large, not much happened. In fact, the year ended with two of the most lavishly funded #PropTech companies merging, a sign perhaps that the market only had the demand to support one of them.

In the real world however (outside analogue Real Estate) technology continued to have a massive impact, to the extent that across Europe and the US the media seems to talk of little else but the end of jobs, the dispossessed and a backlash against globalisation and ‘the robots’.

The genie though is out of the bottle, and barring revolution or war (not entirely impossible with Trump in the White House – or Trump Tower or wherever else he is going to run his companies, sorry I mean the US, from) technology is an unstoppable force. We would all do better to acknowledge the good, the bad and the ugly implications of technological ‘progress’ than stick our fingers in our ears and hope it will all stop. Trump, and his protectionist like, may well mandate that ‘jobs come home’, but if they do, it’ll be the robots that do them.

But all of this is A GOOD THING. Capability Brown got his nickname because he became known for saying to a client ‘this land has great capability’; well we need to realise that humanity PLUS the incredible technology at our disposal should have us singing ‘this world has great capability’. If the world does go to hell in a handcart it will be our, not technologies, fault.

So, with this in mind what should be your #PropTech resolutions for 2017?

1. Stop talking of #PropTech; technology is not a bolt on to ‘Property’. If you are in business, you are in the technology business.

2. Don’t know much about technology? Get someone in to brief you. Keeping up with tech is not your job, but it is your job to exploit what is possible. Find out.

3. After doing No 2 you will know that near as damn it, you should be able to run your business from a phone or tablet (Marc Benioff of Salesforce tries to).

4. With No 3 sorted, feel free to laugh at competitors not fully mobile enabled. They will not be competitors for long.

5. ‘I will format any reports we write for mobile.’ What is it about the Real Estate industry that makes them upload print formatted documents, that are unreadable on a phone? Look around you; what are people looking at? Yes, their phone!

6. Double your hardware budget. Getting your workplace ‘right’ is important but equipping your team with the best possible technology is way more so. A company with great tech could succeed in a terrible office, whereas a great office is useless without great tech.

7. Sort your office out. The Stoddart Review at the end of 2016 showed only 53% of employees believe their office helps them be productive. An unproductive office is like leaving piles of cash on the table after concluding a deal. Low hanging fruit; pick it.

8. Less is more is the perfect Life/Work balance mantra. Eat less but better. Drink less but better. Take less office space but make it better. Work less but better. And use technology to enable all of this.

9. Then do More, with More. Technology gives us all leverage. More (of the right) technology will allow everyone to do more with more. If you can do X in an analogue world, you need to be looking to do X times 10 in a digital one. Countless examples of this exist. It is not fantasy.

10. Buy software that makes you more efficient – BUILD software that gives you a competitive edge.

11. Try and get rid of your IT Department. Technology needs to permeate your business, not be the butt of jokes and hidden away in the worst space in your office. Amazon does not have an IT Department; neither should you.

12. Prepare to hear everyone tell you how their software uses AI and Machine Learning to ‘insert hyperbolic phrase here’! Mostly, they will be clueless as to what that means.

13. BUT AI and Machine Learning ARE the most important technologies out there and WILL change your world. My No 1 resolution would be to learn why and how.

14. Start by hiring Amy, an AI Digital assistant (x.ai), to organise all your meetings.

15. Technology is changing the world to being ‘on-demand’, and our industry is not immune. In fact, ‘The Real Estate Industry is no longer about Real Estate’. Make 2017 the year you think about the Service you provide, rather than the Product you sell.

16. Finally, realise that whilst you probably aren’t that knowledgeable about tech, most #PropTech people know very little about Real Estate. The two sides need to converge. Let’s kill off #PropTech by 2018.

I wish you all a great 2017, and as ever, I am open to argue, debate, support and promote any smart ideas. Follow me @antonyslumbers for more.

Antony

Real estate and the Philosopher’s Stone

October 2016

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.

Antony

This first appeared in Estates Gazette on 7th October 2016.

What is Tech? How will it impact real estate?

October 2016

I’m not sure that “Love is all around” but tech certainly is. From the moment you wake up to the moment you go to sleep your life is, believe it or not, shaped by technology.

You tend to only notice the new things, ‘smartphones, robots, Siri, Cortana, self driving cars’, but that is simply because they are shiny and new.

All technology moves through the stages of Genesis, Custom Built, Product, and Commodity (Google Wardley Mapping). Or rather, exciting to boring. DeepMind’s Alpha Go AI machine beating Lee Sedol was exciting (and a decade ahead of what was thought possible) but electricity is boring.

Not much changes year to year but everything changes over a decade. and we are now nearly a decade since the launch of the iPhone, the smartphone that launched an industry that has totally transformed the world. Never before has a technology market been so large. PC sales average 200 million a year, whereas smartphones sell 1.4 billion, and have done for several years. And beyond that, most people update their phone every two years, meaning new functionality is spreading quicker than ever.

Combined with this ubiquity of a ‘supercomputer in every pocket’ we have high speed connectivity, Cloud computing, the Internet of Things, and Artificial Intelligence advancing at breakneck speed towards becoming productised.

All of which has led to us being extremely blasé about incredibly sophisticated services such as CityMapper, Slack, WhatsApp, Spotify, Office 365, Google Docs, Facebook etc. Even though your Oyster Card is actually based on very old technology the layer of services on top of the data it creates is quite extraordinary. And every time you do a Google search or type a predictive text message you are invoking cutting edge machine learning. As William Gibson said ‘The future is already here’.

The subtle point though, is that besides moving from an analogue to a digital world we are moving from a world of products to one of services. Increasingly we value access over ownership, and want to dip in and out of experiences. We want on-demand everything; taxis, pizzas, films, music, information. Why own anything when you can just use it when you want it?

All around us companies are offering us what we want, when we want it. We might pay more for something pro rata, but we don’t care as we are only buying what we need.

And will property remain aloof from all this? Long leases, upwards only rent reviews, fixed space? Not a chance is the answer. And therein lies the biggest change to the real estate market since the first skyscraper was made possible by the invention of the ‘personal elevator’. ‘Tech is all around us’ has consequences.

According to Google’s new ‘Workplace 2020’ survey & report “Flexible working will be the defining characteristic of the future workplace, rising from 4% today to 32% of organisations polled by 2018′”. Amongst larger companies the change is even more dramatic, with organisations employing more than 6000, up from 10% today to 66% in 2018.”

The same report says “48% of respondents are today unable to access all the information they need via mobile devices”. Which means that, today. 52% can. In other words more than half the workforce can work where they like, as they have all the information they need to do their job.

Where then does that leave the office? As a place to do all the things only humans can. Which boil down to three areas. First, anything that is non-routine, that does not involve repeatable steps, secondly, problems that require ‘social intelligence’ to resolve, and thirdly, anything where ‘perception and manipulation are important in complex and unstructured environments’.

Which is why, again from the Google report “The rise of the new generation of connected workers, empowered by collaborative and mobile solutions, will radically alter the shape of the future workforce and workplace.” And by doing this, will have second order consequences for every property type. What is an asset today make become a liability tomorrow.

So ‘What is Tech?’. Well, it is what is going to transform real estate from being a business that provides a product to one that provides a service. It is what will lead to the real estate business no longer being about real estate. It is what will see the High Street turn from being just about retail to being about mixed use live/work/play. Industrial sheds to super high tech, vertical, urban phenomena. Farming to underground. And offices to ‘Imaginariums’ where humans are augmented by machines. Tech will fundamentally change our behaviour and allow us not to do more with less, but more with more.

There has never, ever, been a more exciting time to be in the real estate business. Lap it up.

Antony

PropTech: The Big Picture

July 2016

Steve Jobs once said of Dropbox that it was a feature, not a product. Which, multi billion dollar valuation aside is probably correct. Great software that it is, ultimately it will end up as part of something bigger. Because it addresses just a small part of a wider need.

PropTech, as of today, is much the same, though without the heft of Dropbox. Much, most, perhaps everything that is vaunted right now is just addressing small inefficiencies, and minor quirks of a marketplace that is largely digitising the past. Lease management, virtual viewings, listing services, comps, data services etc are all addressing the needs of the industry as it is now. Not surprisingly, as one needs a customer. What happens though if that customer is going the way of the Dodo? No point in skating to where the puck is, if the ice is melting.

And melting it is, as the real PropTech revolution will be in what we build, how we build it and what we do in it. And that will upend the entire real estate ecosystem, to the detriment of some but the greater good of a whole lot more.

Last year there was much talk of ‘Stranded assets’ within the oil industry; headlines such as “How fossil fuel firms risk destroying investor returns” and talk of “The $2 trillion assets danger zone”. This was all predicated on the idea that the oil industry was sitting on what they considered long term assets, but that were in reality worthless as they would never be extracted and used, because of the continuing fight against climate change. Societal change will turn their assets to dust!

What if this applies equally to real estate, as the way we work, and the work we do renders old ideas of what occupiers want, redundant? What if 40% of the workforce really do operate as freelancers by 2020, as has been predicted? What if 45% of all tasks currently performed in offices are taken over by technology, as McKinsey say is possible today? What if 5G does become widely available in 4-8 years and we all have devices with us at all times that can communicate at 10G a second? What if Magic Leap (Google them) do create their augmented reality technology that allows us to conjure up holographically real entities, on demand, anywhere we want? What if AI continues this years astonishing progress, skips the high priced limited market stage and jumps straight to being an everyday commodity that all of us can take advantage off, easily and practically for free? What if….?

None of the above is really all that contentious. As William Gibson said ‘The future is already here; it is just not evenly distributed’ These technologies are clearly going where I am suggesting, and nothing will change that. So then what?

Well, even the ‘Offices are forever’ evangelists accept that you don’t need to go to an office to do the vast majority of work today. All the hype around ‘Activity based work’ reinforces this; most of the time it is the face to face collaboration that people highlight as the point of the office. And that is, and will remain, true. But the amount of real face to face we need will reduce markedly as connectivity explodes and the tools for realtime, high definition, zero lag, but haptically enabled, communication come on line. Technology creates options, alternatives, and these often take time to be adopted, but suddenly become second nature and accepted. Think of self check out machines at supermarkets; for quite a while these were resisted, and resented, but today many of us whizz through them as it is quicker and easier that waiting to be ‘processed’ the old fashion way.

So, it seems to me, city centre offices (especially in very expensive places like London, will become rarely used but luxurious treats for employees (or tightly embedded ‘Contractors’). These will be places we go to perhaps once or twice a week, that will be of the utmost quality and that facilitate the intensely human collaborative skills that all of us will need to focus on now that the robots are doing anything that can be automated. They will be cauldrons of social intelligence, imagination, innovation, design, empathy and creativity. Interaction hubs. And if they do not enable this type of ‘work’, what will become of them? They will be stranded assets.

Where will we spend the rest of our time? Nearer to home. Who wouldn’t want to commute less IF the right spaces were available closer to home, with all the right technologies to make them as productive as possible. So the market for transforming urban villages and current commuter belt towns has to be a strong one for quite some time to come. Combined with the above, we have of course the continued rise of online shopping, on demand delivery, and ‘sharing economy’ services. As people slowly realise that trying to revive the High Street as retail nirvana’s is a dead end, they will slowly transform into culturally rich, very human centric, mixed use live/work/play places. The Agora, redux.

And how will we build new spaces and places? With robots, of course. Four drivers will ensure this; first off, the technology either already exists or is easy to fathom out. Secondly, the construction industry currently substitutes labour for technology (and thus impedes progress and suffers low productivity) but as labour becomes more costly, and scarce, not least of all because of Brexit, it will have no choice but to push the button on automating itself. If the Government mandated this through regulation the whole process would move faster but the die is cast; construction is so obviously an industry ripe for automation that at some time it simply will have to happen. Thirdly, everything points to a convergence in the use of space; our homes are full of technologies we use ‘at work’ and our work places are becoming more aesthetically akin to homes, as the way we work suits softer settings. And because of this, the places we build absolutely have to be flexible in a way they’ve not needed to be to date. Usage changes, configurations need to be modified, lighting, heating, furnishings need to flex to perform different functions. Home to office, office to home, either to retail will become commonplace and our idea of what constitutes modular will explode. Obviously this will require work on use class legislation but more importantly it will require construction models, processes, and technologies that allow for extreme flexibility. And fourthly it will become ever more important to be extremely sustainable and energy efficient. These trends, which are strengthening by the day, all point towards the necessity, and desirability, of robotic construction.

And finally, on top of this new type of space, and new usage, will be applied the burgeoning AI mentioned above. Kevin Kelly, the co founder of Wired magazine, has a great way to think about AI. Think back to when farmers had nothing but horses and wooden ploughs. Then think how their lives improved when ‘Artificial Power’ became available, in the shape of engines. Suddenly they had dozens of artificial horses they could call upon for help, that didn’t tire, and didn’t need sleep. And that is how it will be with Artificial intelligence; once we stop worrying about what it means for society we will realise each of us will have dozens, hundreds, thousands of artificial brains to assist us. Instead of thinking how many jobs will be lost, we will start to think of all the things we can now do that were previously impossible. With better hardware, more connectivity, and an infinite number of sensors, AI will enable all of us to ‘do more with more’, make better use of our time, and improve the places and spaces in which we choose to spend it.

All of which is something to look forward to, but to return to the original point; does this mean the ice is melting under the real estate industry as it is today? In my humble opinion it clearly does, but the upside is huge. The future is predictable in many ways, and it is incumbent on all of us to see that, seize an extraordinary opportunity, look beyond rearranging the deckchairs and embrace the big picture.

Antony

Technology: celebrating 20 years of EGi

July 2016

If a week is a long time in politics, 20 years is an eternity in tech. Unlike politics though, tech gets better with age; today is the best day in history from a technological point of view. And tomorrow will be better.

In 1996, we were just at the start of the world wide web (the internet itself had been around since the 1960s), and by the end of the year the number of users had doubled to 36m worldwide. By 2000, this had increased to 361m, by 2005 1bn, by 2010 2bn and today just under 4bn. These are statistics that highlight how far off the IT director of the old Healey & Baker was, when quoted in the then print-only Estates Gazette as saying the internet was “a solution in search of a problem”.

The first internet bust was in 2000, when a spectacular bubble blew up, with the likes of Boo.com imploding, having worked its way through £125m in six months. However, with the addressable audience now being 10 times the size, many of the companies that blew up were really just ahead of their time. No end of e-commerce websites died that year, whereas today the press is endlessly discussing whether today’s variants are killing off the high street.

Likewise, billions were invested in “video on demand” platforms to no avail. Now when you sit on a commuter train half the carriage is watching videos on their phones and tablets. The difference? Sixteen years of Moore’s Law (basically, processing power in computers doubles every two years), ubiquitous high-speed broadband, and smartphones.

And on top of increases in speed and power, the cost of technology has plummeted: 20 years ago I budgeted £100 a month to save for a new computer every two years. Today, two decades later, it would be hard to spend £2,400 on a mainstream computer.

The past though is a poor guide to the future in technology.

The growth in capability and decreases in cost we have experienced over the past 20 years will look meagre when we look back in another 20 years’ time, because exponential industries, which tech is, have a growth profile resembling a hockey stick. Doubling every couple of years from a tiny base means you don’t get very far for many years and then, boom, growth hits the uptick and that very same doubling becomes transformational.

We are now just turning that curve from near horizontal to near vertical, and that has profound implications for real estate.

Three technologies in particular are making great strides, loosely all under the banner of artificial intelligence: machine learning, natural language processing and computer vision.

The first is where computers can autonomously learn what actions to take, independent of human instruction, the second involves computers being able to understand our requirements just by listening to our spoken words, and the third covers computers understanding what it is they are looking at. This is the basis of facial recognition, which computers can now do better than humans.

Twenty years ago the real estate industry could, and largely did, ignore the internet. The small audience meant it was a sideshow. Twenty years later, many in the industry still have that “it’s a people business, go away” attitude, but today many of their customers are used to running much of their life and businesses asynchronously, remotely, and via their phones.

The old way of working is dying; give it another five to 10 years and it will be unrecognisable, not least because virtual and physical face-to-face interaction will seem equally “human”.

In five years’ time, 5G will arrive providing mobile connectivity of 10GB per second or even more. For many, that is 1,000 times faster than today. And with 2bn smartphones being sold each year, the component parts (including a wide range of sensors) are becoming almost free, meaning our built environment will be awash with real-time data feeds. That will enable a whole new world of services.

Does everything really change over 20 years? Well no, it does not. In 1517, Niccolo Machiavelli wrote that “men have been, and ever will be, animated by the same passions”. Some 500 years later the same holds; the difference being that if you embrace technology, you can meet and match those passions in ways not possible by your predecessors. You can do more, with less, for more people than ever before.

Happy birthday EGi: here’s to the next 20 years.

Antony

First published in Estates Gazette 14th July 2016