#5QuestionsWith is an interview series with RE experts to help the industry learn, grow, and be inspired. Read on as FM and PropOps leaders talk to us about their highs and lows and what it means to be a change-maker in the smart buildings arena.
About Phillip Kopp
Phillip Kopp is the co-founder and CEO of Conectric Networks, a company on a mission to integrate all the world’s buildings with renewable energy grids for a more productive, safe, efficient, and environmentally sustainable world. Author of and contributor to more than 15 U.S. patents, Phillip has an extensive background with technology startups. In 2000, he co-founded Energy Eye, a global leader producing patented wireless sensors for hotel energy management retrofits; Energy Eye went on to win multiple international awards and was acquired by Somfy Group in 2009. Following his passion for technology startups, Phillip guided the development of Debitec, a non-bank fintech solution focused on the unbanked population in Brazil. He cofounded Cloudbeds in 2012, named Hotec’s Best Property Management Software and Best Booking Engine for the hospitality sector in 2021, and listed on Deloitte’s Fast 500 and Red Herring’s Top 100 2020 lists. Phillip then co-founded Conectric Networks in 2015, the company developed advanced low-power communication technology through partial funding from the California Energy Commission and the US Air Force to allow near real-time physical, environmental, and energy data collection in the intelligent building space. Under his leadership, Conectric also developed technology that won the Top Communication Technology award in 2019 by the Telecom Industry Council, which represents over three Billion wireless subscribers globally.
1. What is the biggest change in property operations and the smart devices/buildings industry post-pandemic? Can you elaborate on this shift?
Commercial buildings need to be re-occupied as most are still hovering between 10-25% occupancy. Technology is going to play a huge role in addressing this, but it won’t be with the wireless smart devices everyone thought were must-haves before the pandemic. Today, boosting occupancy back to, and even beyond, pre-pandemic levels will require retrofitting millions or billions of wireless smart devices that buildings didn’t need and weren’t designed to use in the first place with mature, robust software—software that can do what needs to be done, which is to assure people that buildings are safe.
The industry is tossing around a few tools and strategies to do this, but the winning solution will be one that gives occupants real-time, continual assurances of safety while giving owners and operators the ability to rein in costs, elevate profits, and provide those assurances.
The biggest win in terms of occupant safety will be around occupancy, air quality, and ventilation.
Occupants want to know their spaces are properly conditioned in line with best practices—and simply reusing those existing CCTV systems or pushing out basic access-control-system analyses won’t cut it. The real pros have already figured this out; they’ve installed autonomous monitoring networks, the kind that publicly display safety data to building occupants.
Another major win that touches on occupant safety is around building maintenance. It’s no good if occupants see maintenance and support people running around the building all the time. How much better for confidence if their building was smart and monitored remotely—if it used an end-to-end approach in which monitoring software drove work orders predictively based on real-time building data?
Such an approach would boost occupant confidence as well. Any occupant in such a building could see, at a glance, how well systems were working and where and when maintenance might be needed. They could see that the air handling system is functioning at optimal levels, the machines are due for preventative maintenance next month, and that the space is and has been operating at peak energy efficiency.
Not only would this give occupants a real sense of safety; it would also serve owners and operators by making buildings more profitable to operate in the long run. Granted, not every company would use the same tools and technology, but, ultimately, the buildings that win post-pandemic will be those that can prove to occupants that they can safely use buildings.
2. Talk to us about the challenges in the current approach to IoT connectivity and scaling.
When it comes to IoT connectivity and scaling, there are a lot of challenges, the largest of which have to do with risk, portability or flexibility, and use case fragmentation.
In terms of risk, I’d say that anything needing to be assigned an IP address is pretty much out, primarily due to IT systems risk exposure. Anything tied to a permanent power source is also probably out, because being tied like that affects installation flexibility and portability. If the data source is installed in the wrong place it won’t be accurate, you might as well not have it in the first place. This means no more wired low voltage systems, and no systems “built into” building ceilings, or across shared IT infrastructures. You normally can’t rely on battery-powered or plug-in, portable devices, especially if you want to report conditions in near real-time as they typically provide data intermittently. These are the challenges I have focused on in recent years.
The biggest issue I see, though, is that the industry is highly fragmented. There have been hundreds, perhaps even thousands, of solutions developed to target and address specific problems.
And although each single solution might indeed solve each specific problem, the problem and its solution are also components of the overall operations of an entire building.
This is as much about having a “data strategy” as it is about anything else. Imagine you invest in three or four new systems to address three or four specific issues. You might solve the problems, but the data around those problems is hard to get in and out. You might realize huge value by combining those data sets into singular business intelligence. And being able to access that data might literally make the difference between a company that survives and thrives and one that loses and goes bankrupt in the (near) future.
A new technology-facilitated approach is emerging, more of a horizontal system, that lets you capture data from all systems using smart devices on the edge of the network. On one hand, because the devices are wireless, building tenants can pay for the hardware and data as needed without having to dip into the common purse. On the other hand, once the data is generated, it can easily be integrated into core buildings systems. It’s a hybrid approach that combines portable devices, data on the edge, robust backend software, and a consumer-grade, front-end interface. We think of the architecture like Lego blocks; it focuses on who uses which data for what, and how the data can be mixed and matched with minimal risk for each stakeholder. It takes the data up into the cloud and then drives it back down as needed into the Lego bricks of your operational technology.
3. How can owner/operators improve the connectivity potential of IoT devices and break free from the stove-piped architecture of existing systems?
Right now, essentially all systems are centered around the IT network or the IT backbone of the building. Traditionally we have a separate low voltage system for building technology and an IT network for trafficking data. Now everything including OT (operational technology) converges around the IT network because of Cloud. This isn’t a recent development. And the automation OEMs embrace it because it enables them to sell new hardware. People talk about this term “open protocol” all the time like it allows multiple vendors to plug into a single IP backbone, but in reality that doesn’t pan out because you still can’t program the systems without proprietary tools. And those tools are protected by territorial technicians and installer networks. The IT network just sends the data someplace else on a different kind of wire; that’s really all it does.
I believe the answer to getting away from all this risk is to get away from IP. Period.
IP is a convenient protocol that allows vendors to easily produce hardware. It’s a huge market because they don’t have to think much; no innovation is needed to build an IP-type smart device connected to a WiFi network or ethernet. And though producing such devices is relatively cheap for vendors, using those devices is costly for owners and users, who need to run a lot of fiber and cables to run that protocol on and carry the data around in, and a herculean “Data God” effort to manage it all securely. Building owners are even installing multiple IP networks, at a very high cost.
The IP risk comes from hackers or competitors getting into business systems and sensitive customer data through the IP enabled OT networks, and there are many well-documented cases of how easy this is. Frankly, IoT devices should not include the word Internet in them. They shouldn’t have an IP address and they shouldn’t be connected to the Internet at all. True IoT devices should generate data in private networks behind paywalls or firewalls or some kind of wall on the edge, a wall the customer can control without even saying the word Internet.
I would also argue that a solution like this will be a mature offering with as few components as possible. It goes back to the hybrid approach, where you essentially have one IoT network—NOT connected to the Internet!—and one pipe to a robust cloud solution that gives the building owner/manager full data access from all of the OT and IoT devices and even BI (business intelligence) metrics, is simple to manage from a data risk perspective, and is capable of solving the initial problem, which is to make buildings more occupant friendly and safe, and able to operate at a lower cost, so some of the pandemic fallout can be mitigated and building value increase into the future.
4. What are the benefits of a unified model of ‘connected buildings’?
The benefits are huge and fairly obvious. The fewer people that need to be involved, the fewer opportunities for problems, and the easier problems are to pinpoint when they do crop up. And when something goes wrong, it will be anticipated and much easier to fix, and there won’t be an endless cycle of finger-pointing without resolutions.
There are more subtle advantages, too. While specific data sets do solve specific problems, such as space utilization, work order management, predictive maintenance, and employee engagement, we really don’t know what problems we could solve by combining those data sets, problems that will become patently obvious once combined. I call this the “exponential value factor.” Or as Nicholas Waern, the prominent smart-everything architect likes to say, “You don’t know what you don’t know.”
These “building” systems and the data they create will solve seemingly unrelated challenges. They could solve HR problems or collections issues. For example, is there a high level of absenteeism because employees are just uncomfortable, or is a tenant not paying because their worker productivity is low and it’s impacting their cash flow? A truly intelligent building will tell its tenants and owners this kind of information. They could resolve civic use cases and show us incredibly powerful things like how to accurately price real estate for non-financial discount factors, or how to make it feasible for employees to afford to live in a city. The value of these future initiatives will be tremendous… I’m talking Trillions and Trillions annually.
Think about the reason we’re stuck in this great reset problem in the first place. We generated a huge amount of data, stupidly. It’s locked up in little data fiefdoms, creating obscurity that has led to market inefficiency and profit hoarding. It’s a “death by 1,000 papercuts” problem that has bubbled up into a crumbling social system and is fueled by inaccurate asset price discovery and the resulting extreme-excess in payroll structures needed to support stratospheric urban housing costs. It’s a vicious cycle. We’re in the real estate industry, which is actually the core of all society. Almost everything revolves around where people live and work. We’ve failed with really bad data policies. And we’re now seeing those effects, amplified by the pandemic.
The good news is that we can fix things pretty easily and inexpensively with data and technology—as long as everyone is willing to embrace the solutions.
But if the next wave is not architected properly from the beginning, the value will not be accessible. Frankly, it will be a lot of waste and re-doing over and over, trying to get it right. Better start right, right from the beginning. And that means a unified architecture that provides data to all stakeholders so we can unlock those huge values in a secure, simple way. Then everyone can benefit as we create new opportunities that distribute the value much better.
5. How do you envision the future of building operations? How can software and hardware providers partner with real estate companies in their O&M innovation journey?
I can already picture every single building as an autonomous smart building. Each building is at least 50% more energy efficient. It has optimized occupation and higher occupant productivity. And each building is part of an energy network that’s almost entirely fed from practically free, unlimited, renewable energy supplies.
The funny thing is… we in the industry talk about this like it’s far in the future. But it’s actually possible right now.
I argue that the reason why it doesn’t happen is because software and hardware vendors are often horrible partners with their customers. Of course there are exceptions. And though I’m sure my saying this will make me unpopular with certain people, I think the roadblock is more or less a function of hardware players trying to lock in future revenue and prop up profit margins by locking in customers.
It’s also software providers trying to stay away from the messiness of hardware by pushing hardware back to the customer, saying, “We’re just a software company; you figure out the hardware.” Customers usually don’t have the time or resources to figure it out themselves.
It’s also the integration expert, which hasn’t yet produced the building of the future on a large scale. The integration folks can add huge costs for the customer, with building operations systems coming in at over 25% of the construction cost, sometimes more. The technology and mechanical systems cost in a building are nearing insanity these days. That cost stifles adoption.
For me, the building of the future can be here today—if all vendors work towards the customer’s best interest. This means a true collaboration between the hardware and the software vendors to make it easy for the customer.
It means the hardware guys giving up control to the customer and keeping it within the edge. It means multi-function systems, where one system can do the utilization, the health, the automation, the maintenance management, and the remote operations all in one.
It all comes back to that hybrid approach, where everything is unified AND separated into subsets of competency, giving the customer new degrees of freedom and security. It’s how we’re trying to architect the smart vendor of the future so we can finally get to the smart building of today. It’s the model we’re embracing with our close partners like Facilio, who give unprecedented unity, control, and value across multiple stakeholders in an easy and sustainable way. The result is a better real estate market, where tenants are more profitable, occupants are healthier and more productive, real estate is priced more accurately, and value is distributed better across society. I’d go so far as to say that the crux of the great reset at hand is really more about fixing broken real estate models. If you fix that, everything else falls into place.
Just imagine it. Companies can use payroll savings to better manage their real estate, which has leaner and more optimized footprints in buildings with lower operating costs and higher occupancy, so they can make more money per square foot while employers require less square feet. With lower salaries, residential real estate pricing can readjust, and populations will balance in cities that offer the best services with the most optimized costs. And when all of this leads to almost free, unlimited energy, you get much more economic leverage and great advances in civilization.
Energy has always dictated the advancement of civilization since the first caveman discovered how to make fire. We have this opportunity right now with IoT in buildings. But we need to start doing things differently. We need to get into the hybrid approach to make it possible. Let’s get hardware and software vendors to collaborate and provide systems that are not hugely dependent on deep integrations or IP. That will be the “Internet of the real-world”, but it won’t be like the Internet we know today. It will be a new parallel network focused on buildings and using partially the Internet and partially the IoT network. This will lead to tremendous improvements in efficiency, ease of use, and value distribution so that operating a building is almost just an afterthought. It’s not just a building of the future; it’s an industry of the future and a vendor of the future. And with the collaboration between Facilio and our company, Conectric Networks, we’re here now, putting this strategy in front of you, and paving the way for the change we all want to happen at scale.