Steve Todd: Data, Finance & Workplace

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How does capital investment in real estate improve profitability?Coming from a background in finance, Todd challenges the audience to think about presenting business cases for workplace change to a CFO or COO. What are the inputs and outputs? What is the present value? How do we present information that allows you to make decisions about workplace productivity and drive the bottom line. Can we tangibly track and display results to make that business case?

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Steve Todd, AVP, Global Head of Workplace, NASDAQ

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VIDEO TRANSCRIPT:

My name is Steven Todd,  I'm Global Head of Workplace at NASDAQ and I'm also the founder of Open Sourced Workplace. So what I want to talk to you about today is I want to challenge you. I want you to think about workplace in a different way. I want you to think about workplace and how you would present a business case to a CFO or CEO. So in essence think about what you would need and how you would present that information and then we're going to get to optimize and productivity.

So the way I sort of position is that I'm a finance background, I spent 15 years working in finance, everything we did we did an investment appraisal every time we did a business case. That was what were the inputs and what's the output of a CEO or CFO or interested in is what is that profitability? Is it gone back to what was said before what is a net present value? Is a positive as a negative? If it's a positive okay let's go and do it. So how would you then position that if you wanted to think about workplace. What are the attributes. what are the inputs that drive the outputs? When we consider workplace and how do we sort of position how do we think about that? 

So in 2014 when I got into real estate these are the questions that were going through my head. How do we actually get together. How do we present information that allows people to be able to make those decisions? And these are some of the questions that sort of were flowing through my head. What makes employees productive. What features of an office actually drive the bottom line? We all have a perception that given everyone great coffee drives productivity but actually can we tangibly track that to actually display that actually helps the profitability of an organization.

Do employee engagement scores actually move the bottom line. We aspire to improve them every year but actually does it really materially make a difference. Anecdotally we think it does but we don't have any scientific proof behind it. How does capital investment in real estate improve profitability. So whenever we're presenting a business case how do we actually know that we're going to drive profitability. Real estate is an expense sucker right you have to pay for that through layers letter. You hope you gain benefits from it so how do we put that narrative ahead of time and how do we work that idea and does an employee compute impact profitability and this is just the way my brain works.

I just think along those different lines is it actually a benefit or is it does actually hurt if employees have to travel further. So that's sort of where some of this where this lays. So as I thought about this how do you even start to think about getting the data to answer some of these questions. And so again go through that concept inputs and outputs right. So what are the inputs that we could collect that actually would help us address some of that information. So yes we've got the usual suspects of real estate and human resources but again bringing in that corporate financial information where's the sales revenue coming from per location. 

What is the expense associated with every single office across the organization. What is the product profitability of every product that we produce as an organization on what location are they associated with. Whenever you marry that with real estate with employee turnover with other aspects of some of the other data points then you can sort of start to see pictures evolving and actually the conclusions may be able to get to. 

So what are the marketing KPI is what are the seals KPI is how can we bring that together into one data set to help funnel some outputs and some conversations and external data. So where is the access to talent in all the locations that we operate in right. How many if you've got sales associate. Does it actually impact them for the actual amount of people they're connected to on LinkedIn. Is there a direct correlation. I don't know but again these are some of the ways that our brains are sort of working and obviously the whole point of this is to drive outputs.

So to try and picture this a little bit more I put together a little scenario. So you know you're a sales manager you've just got given this initiative we've built these new widgets you got to go and sell it. So how do we sort of package these datasets to help the sales manager one pick the right location where he wants to put all these people and how does he present that business case again thinking about the CFO and the CEO or he wants to present or she wants to present that information. So what if we were able to pull all this information together? What is the average cost of employees of every word that we operate.

What is the occupancy cost associated with all those various locations? What are employee engagement scores? What is the real estate score for all those various locations, what are the utilization rates the staff turnover, the commute time, access to local talent, what actually is the cost of that local talent that we want to grow? What is the sales revenue by office? As I said are the distance to direct supervisor so how many time zones away is your direct supervisor how does that impact the sales potential of whatever office.

So can you imagine a sales manager sitting down with their eight hour business partner and this is all the information they have at hand. How much smarter and how much better decisions can their sales manager actually make when he then goes to take or she goes to take the business case to the CEO or the CFO. It's a lot more substantial that there's a lot of data behind it. Year two whenever they come back to evaluate they think back and track an index against okay these are the reasons why we made the decision was the outcome as expected. 

So when we go through when we collect this data we always aspire to get more data and part of that. One of the things we have to do is always ask ourselves what is the ROI of this data. What is the cost to actually get it and if we get the information will it actually make a difference to the decision. So today you know we talk about how we can actually look at security badge data and we get utilization rates. Well then if you have that and utilization rates and we all know is usually around 60 percent. If the management isn't going to make a decision or change the decision on that information why pay for it.

Asking for a Desk Utilization Study because they are  hardly gonna change their mind later. Is this how you evaluate what actually should be taken?

So part of this is we go back to the last question are there sort of one of those questions we had up on the board, how do we actually engage with the CEO and CFO to actually allow them to make decisions and how do we present information to them to make decisions. And one of the things we did at Nasdaq was we try to tackle the question up there, what is workplace productivity what is employees productivity and what does that look like. We actually went out to our employees and we asked them. 

We provided 35 attributes of an office and asked them which of these attributes makes you productive. And over half our employees responded and this is what we ended up with. So this is our true north in everything that we do and how we look at and evaluate what we have to do in real estate.  When we're designing a new office, this is where we go. This information, we can look at it by every location. 

The actual productivity factors change by location, so whenever we actually assess what we need to do we go back to this, the attributes, and we look and those are what we benchmark against and we put that forward.

So we have these attributes, each year we ask the employees how do we rate against each of these attributes and what is the opportunity we have to improve an employee experience at every single office. It also helps us whenever we come to make those capital investment decisions we're able to display this information we're able to display the feedback we get from employees. And here's the investment we want to make. And we're now in a cycle where actually we are able to go back and validate actually here's where we invested the money and this is the impact it actually had on the employee experience and how they're rated their real estate portfolio.

So as I said my background finance I come at this at a slightly different way and my brain's a little complicated. Yes it is. But in essence that's how I try to look at this stuff and I sort of want to challenge the team and I sort of hope you've taken a little bit away from what we've said and how you sort of present data and information to the CEOs and CFO. So thank you

Michael Davidson: Curating the Employee Experience

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Through a truly unique perspective, Davidson takes us back through time to examine the fundamentals of human need and the earliest human disruptions.

Disruption is nothing new, it is as old as we are. As soon as human beings evolved from primates to homosapiens, and realized they needed shelter from the elements, to eat, to breathe, to protect each other, they have been disrupting themselves ever since.

Disruption was based on the needs of the humans at that time but today, humans are the same….how do we measure ourselves? By what we’re building. 

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Michael Davidson, Head of Global Corporate Real Estate, Managing Director, J.P. Morgan

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VIDEO TRANSCRIPT:

It's a pleasure to be here. My name is Michael Davidson, I am with JP Morgan Chase and have been for nine years and I lead JP Morgan's global corporate real estate portfolio across Asia, EMEA, Latin America, and North America. So today we're going to talk about corporate real estate and disruption.  But before we get to your 2019 I want to go back in time, all the way back in time because this notion of disruption is nothing new disruption is as old as we are the universe the earth by the way was created a pretty big disruption.

As soon as human beings evolved from primates to homo sapiens and realized that they needed shelter from the elements and to eat and to breed and protect one another, they've been disrupting themselves ever since. In 2019 and going forward is just the latest incarnation in our lifetime. In the ancient world the Great Pyramid of Giza or the lighthouse and Alexandria. In the modern ancient world you had the Taj Mahal or Machu Picchu by the way if you look at the wonders of the world and one of the great benchmarks for how humans rate themselves in terms of their progress it's all stuff that we built with technology stones and architecture and thought and one of the things that makes that common to what we're doing today is that all of the great wonders of the world had a purpose and they were tethered to a culture and they were based on the needs of human beings in that society at that moment in time.

Now let's go to 2019 and we have the benefit of having experienced the 20th century and now the 21st century humans are the same. How do we measure ourselves by what we're building? Only now we have steel and glass and we build towers and we go as high as we can possibly build them. We impress ourselves with these monuments and they are monumental. If you go to any city around the world, what are you impressed by first the skyline. When you go to the souvenir shop what do they have, little statues of buildings that were built that you think of a city you think of the Eiffel Tower you think of the Space Needle in Seattle you think of the Colosseum in Rome you think about what we built.

So if you look at this your vision and architecture and engineering and technology. But is it a curated experience? Like what's it like to live inside of these structures. It's great to look at,from afar. It's great at night when they're lit up but if you're one of the three or four or five or six or seven or ten thousand people that go and work in these buildings every day. What's that experience like. Is it is nice is looking at it from afar. JP Morgan is on the cusp of doing it once again.

We are taking down to 70 Park Avenue which was in the Times last year to build a new tower one that is thoughtful one that has core and shell and look and feel and all of the pedigree that you would imagine with a 21st century office tower. We are going through this exercise now but the fundamentals are very much the same, which we'll get to.  

We've built spaces year after year after year and we've hired the best architects and the best thinkers and the best amenities experts and we've engaged H.R. and we've tracked our headcount and we've created spaces spaces that are modern that bring people together to eat to think to learn to collaborate that don't feel like a bank. It feels like a place you'd want to sit and talk to someone.

All of these are examples of spaces there's no need to call out where they're built. It's fairly ubiquitous in terms of how we approach our real estate globally also because our employees are global so that what you build in Singapore or New York or Dallas or San Francisco people travel and if you're not building like for like and you're not consistent they'll call you out on it.

We're very consistent in terms of our design palette. Now, if you're an occupant and one of our spaces or in any space anywhere and if you really add up and account for all of the things that define your experience as an occupant, coming to work every day.  What's your experience like?  all of the things we could have named more but we ran out of space on the slide but we think we made the point is it curated or confusing. One of the things that happens is that although we lead real estate we don't lead all the things that impact your experience.

We don't lead security, that's among your first experiences whether you can get into the building does your card work.  We don't run amenities, food pantries, technology, wellness centers we integrate them in real estate but we don't run these functions. So through the years occupants and different companies occupying remarkable structures probably felt like they're looking at oncoming traffic rather than like in a curated workplace experience. Because all of these things were happening if they were synchronized, it was almost luck or it was because people were really good partners within a firm.  But this is often what happens and what happens on the inside.

I can tell you that every one of these emojis in my 25 year career I have experienced every one of those emojis and many more in the occupants that I've served. You get the entire spectrum depending on what people's needs are how they feel how you're delivering it and how you're integrating the myriad of things that actually impact a person's day or a moment in the spaces you create.

One of the things that happens or is happening in the 21st century is that one of the solutions as well is just fill the space with technology to really disrupt ii and if we load the space with technology well people will love it.  They'll be connected and they can use their devices and they won't need to get together as much. So there are two problems with this. One problem is that when technology is installed people don't often know how to use it.  How many conference calls or telepresence on Cisco have I been in meetings internally and externally where you have eight smart people around a table saying how do you like dial n. It should be intuitive but it's not always intuitive. Is there a wireless signal. Oh wait. I'm from an outside company my laptop doesn't work. Sometimes the technology is not as intuitive as it should be. 

The second thing that we're learning and we're learning this much more slowly, not just at a corporate level but at a societal level is that we're more connected than ever and yet we're lonely.  Why I'm connected to my friends all over the world via social media. They can say hello to me and share pictures. Why are kids lonely.  Why do we get notices from colleges and universities that say that anxiety and depression are on the rise? because there's a fundamental human need for connection and it isn't via wires or screens it's in person, something that's never changed all the way back to the ancient times to now is that people need each other.

When our businesses come to us now to develop new spaces it's interesting that among the first things they say to us after technology is we need spaces to get together in person to innovate. Innovation Labs collaboration spaces smart rooms where we can physically come together even though we can do it with technology remotely we need a room where we can physically be present. That's where the innovation actually happens. 

So you have to be aware that you don't try to solve the previous slide all of the different inputs by saying well let's just kick it out with technology and it'll be fine, It won't be fine. So let's go all the way back in time again and let's talk about fundamentals, fundamentals that were true in the ancient times and every century sense. These are the things that within JP Morgan we are evangelizing over and over again is how we treat one another.

Is that one of the primal parts of the experience that we have no matter how nice your workplace, how beautiful building it is, how far into the sky you are sitting, because we were able to build it that high, is that if you're not treated with dignity and respect by the people you are spending time with, your experience will not be good; if it's not fair.  If these are not exercise if there is not empathy and accountability integrity and respect and diversity and trust, well no matter what space you're in wherever you are in the world you're not going to have a great experience.

So corporate real estate, we are disrupting it and it. It’s being disrupted but just like every other object in space has been built by mankind since the beginning of time, if you disrupt corporate real estate without purpose, purpose equals plan equals strategy equals thought,without values without culture without humanity and honoring and genuflecting to the inherent human needs for the people that are going to occupy your space, well then your disruption is just going to be disrupting and nothing else.

If you use these as pillars, if you build your disruption upon these pillars as a grounding well then what happens is that the disruption becomes a transformation and why is it a transformation? Because you're creating an experience that attracts and retains people. So when you attract and retain people this is arithmetic.  If you attract and retain them that means they start to build relationships and when they start to build relationships they start to trust each other and hang out more and when they do that they talk more and when they talk more they start to share ideas and open up with each other. 

Then they start to innovate and then the real disruption starts to happen. The constructive disruption the moving forward progressive disruption that impacts the person the team the organization the industry and even society itself.

Thank you very much.

Vik Aggarwal: Diversifying Your Real Estate Portfolio Strategy

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Vik Aggarwal, Global Head of Enterprise for Knotel discusses diversification of commercial real estate portfolio strategy. What you need to know about flexible office space, hybrid real estate model & more.

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Vik Aggarwal, Global Head of Enterprise, Knotel

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VIDEO TRANSCRIPT:

We are going to talk a little bit about Knotel but this is not a sales pitch. This is about how we approach portfolio strategy. So, for those that don't know me my name is Vik Agarwal, I run enterprise for Knotel.

I’ve been here for about seven months, prior to that I was number two for global real estate for AECOM out in L.A.. Prior to that I ran global real estate strategy for American Express. and prior to that I had CFO role and portfolio strategy roles at BlackRock, Morgan Stanley and J.P. Morgan Chase. So what we're going to talk about today is how you diversify your real estate portfolio.

A lot of that comes down to using flexibility. Harvard Business Review put a quote out about how important flexibility is to a portfolio. Now this is nothing new for any corporate real estate executive, we've been trying to do this forever. Take a traditional lease you know, talk to the landlord, get me my termination rights sure for our expansion rights all these different things but they will come at a cost. And  still you exercise a termination clause you're going to pay on unamortized TI’s, you're gonna pay unamortized commissions, you have asset write off. It's a huge financial pain that you take on the P&L cash flow and balance sheet. 

So yeah there are some advantages to taking a direct lease. Some of these are long term stability, you have more control of the space of a direct ownership relationship. You have the ability to advertise your assets that you own over a period of a longer period of time and you can really control your privacy your I.T. your security as you enter the space. Now flexible workspace is something that's new and it's a new tool that's in people's tool belts.

Now Knotel is not and why use flexible workspaces that we are not coworking. So a company that does enterprise grade does not want two seats, three seats sitting next to random strangers. They need to have their privacy. Some of their employees maybe we're using P.I. data, social security numbers, you know this is a lot of intangible risk and tangible risk around having a transient crowd working with your employees. 

As you think about flexible workplace there's a lot of different ways to use flexible. Your company may have gone through an M&A and maybe divesting a company, it may need swing space, a line of business may need to work differently. Your CEO may have said I need three hundred seats tomorrow and that becomes your oh shit moment right. That you need to go and solve and you've got to be the superhero. So the benefits of flexible is that you don't have to do occupancy. So U.S. gap as you a straight line your rent  as soon as you take possession of the keys which is a drag on earnings; CFO’s don't like that, that goes away. 

You don't have disposition costs in the future. So say your headcount balloons say it reduces by 50 percent, you don't have to go worry about disposition of the space and sub leasing it. You don't spend capital? you are basically converting capital to opp X so that frees up your free cash flow for a company that allows them to go buy things with their cash and use their balance sheet for some things more creative to earnings. If you can have a fully serviced office experience which has IT, design workplace strategy, you don't have to give up some of the stuff I said in the traditional lease about the IT  you get find the right provider, they can even hand you the fiber optic wire and walk away. 

Everyone's headcount fluctuates.  There is a Boston consulting analysis that says 41 percent of the companies interviewed said their headcount projections were wrong by 100 percent. This is not new to anyone right, so if you think about that that's a huge drain. Real estate is the second largest expense for a company so getting it wrong has huge financial consequences.

So why go long in space when the word future inherently means uncertainty and you have the ability to have a fully tailored office that matches your space standards and branding experience, use a certain type of stand desks across the world we can match that. You know Michael talked about whether you go to Portugal or London or D.C. or LA they want to have the same experience as people travel. You can still have that when you work with a flexible office provider that is global in scale. 

There's a mix between this now too.

So some companies are saying you know what I know what my base headcount is going to be is never gonna change but I do when projects and I do lose projects. So I need the capability to fluctuate up and down based on future needs, so that's what I call the hybrid model. The hybrid model is basically that you can add flexibility to transaction level. So a company like Knotel and this is something we've actually done in London is a company who said that they wanted space and go long, but they want to be in the whole building but they don't want to have the whole building today.

So what do you do, you reach out to a flexible service provider like ourselves. We took down the rest of the building and they took a floor day one so they can contract down. Then they also have call options,  first refusals to go long in that space is adding true flexibility at the transaction level and choose scalability. So you're not bifurcating that a second third fourth building or have future disposition risk. 

One of the concepts I want to talk about and this is a metric that every company uses which is net present value to determine what's the best way to make a decision.  Building A verse Building B, Time Value of Money.  Time Value of Money tell us your dollar today is worth more than your dollar tomorrow. But there's a flaw. It doesn't tell you whether the decision was right day2.  It doesn't tell you whether you're spending good money after bad money. So there's a reverse concept of that called the money value of time. So if there is a way to create a structure where you're spending a few percent more to not have to make a decision that's valuable.

What keeps people up at night,  I went too long in space, I went too short in space,  my CFO doesn't want to spend the capital of a fully depreciated asset, I don't want to have dual occupancy have a bubble period. All these things that show you as a real estate professionals like this a no brainer we should be doing it. These keep other people up at night as disposition risk,  asset write offs. If you have a capability to scale up your headcount or scale down the headcount because you're flexible workplace you're not spending capital we don't do occupancy that really transforms the scalability and your ability to do portfolio optimization on a real time basis.

You've heard a lot about what exposure a landlord wants to have in a building. People talk 15, 20 percent of that space should be flexible. But for a corporate real estate executive, what is the right mix. People want to have metrics. Everyone has KPI’s. Well, every business is different. So you have office vacancy rates that are different by market and by industry and most companies say you know what I want to have 10 percent vacancy so I want to restock the whole building.

But then you have on top of that not everyone comes to the office every day. Yes you solve that through heads to seats ratios. You look at badge swipe data but the truth of the matter is people travel. People take vacations, people take holidays, things happen. 

The short answer to that right is that there's really no answer to that. You really have to look at your business and say by market, by business unit what is the right metric that I want to have. And you start implementing that based off of that. Flexibility is the most important thing that company can add to the portfolio because it really allows them to have scalability upwards and downwards for their second largest expense for the company

Kanav Dhir: Powering the Future of Real Estate - Transforming a Trillion Dollar Industry

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Kanav Dhir, SVP of Product, Vergesense

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VIDEO TRANSCRIPT:

Good afternoon everyone I'm Kanav Dhir from vergesense. I'm a product manager here. I lead a lot of our product efforts in the hardware and software side and I'm gonna talk to you about how bird sense is helping solve a lot of the questions of today. We have of our spaces around how the spaces are being used and also preparing us to solve a lot of a question we're gonna have tomorrow 

So we all know the transformation that's happening in our industry right. So there's a trillion dollar asset class. We have millions a square foot in our corporations and the way these real real estate is being used is completely changing. We have more dynamic workplaces it's not individual offices anymore. We're designing spaces to be used for interaction. And with all of these changes we need a way to understand how these spaces are being used 

there's some data that shows that with coworking spaces the day old 200 square foot per person is now going all the way down to 75 square foot per employee. There's a big change and we need to understand how it's being used and what can we do about it. 

The industry has a problem it's a little bit of a mismatch in the slide here but there is a lot of different types of data sources available and they're disparate. They're complex they're not fit for purpose. We have manual surveys which are actually really insightful data but they're infrequent they're costly and we have a lot of companies spending a lot of money on Wi-Fi data badge data and they're trying to eat soup with a fork. They're just trying to understand how spaces are being used from data that's not meant for that. And then there's data that's related to low quality sensors. 

I'm trying to use sensor designed to turn on lights to understand how my space is actually being used 

so advert since we're designing sensors that allow customers to get the power of computer vision. 

The technology has made accessible responsible and relevant for understanding how spaces are being used. This technology is 100 percent wireless. 

It can be deployed in minutes is a cellular backhaul so bringing low I.T. friction and the data itself is ninety eight nine 10 percent accurate and a hundred percent anonymous and we're able to do a lot more with it than we would think so versus the one of the main models that virtuous is deploy the main kind of value that we're bringing to customers around people counting so would the single sensor over a pot of desks and six to eight desks we're able to get not just occupancy but person count down to the desk level we're also able to deploy the same sensors in any space whether it's a soft seating area cafeteria lounge and we're able to get a person count for that space and even spatial awareness of where in that space people are 

that's just the beginning. 

Here's an example of a new model that we deploy to the customer so a customer is using virtual sensors to understand how their space is being used for several several months and they actually brought in CBRE to do a manual survey during the time vertex was there and there was two purposes of this. One was to make sure Virgin's is working and we found that Vertex was actually with a double blind test 99 percent accurate. The other was to understand are there data usage that the data is not able to collect other things in the ways people are using the space that we're just not able to measure. 

And one really interesting insight that they found was 25 percent of desks and 10 percent of conference room usage was passive meaning no one was there but they're not available for people to use so with this customer with the same exact sensors they're using for personal count because they're powered by computer vision. We deployed a new model that allowed them to not just get a person count for space but also understand if their signs of life. So both from a historical analysis recycled back understand what percentage of usage is falling within this criteria so they can make behavioral changes but in a real time perspective for live addressing for real time understanding what's available they're able to not you know lose out on occupant experience by sending people to a place that may not have people in it but is still not available for them to use 

this is these are just some of the beginnings of what customers are able to do with our sensors we have customers that are working with us and figuring out for facilities use cases. Can you identify how messy a space is. How much has it changed so I can actually prioritize which spaces too and to not clean. Rather than having a cleaning service go out every single day. We have customers that are spending millions of dollars designing furniture and spaces designed for collaboration and they want to measure. Is it actually being useful or spending money on. So we're working with the customer to design a model that can actually put a collaboration score on these meetings these interactions are people interacting. 

Are they using the space for individual work. Should we be designing different types of spaces and then anything from customer occupants using spaces that are probably not designed to be used to making phone calls and even down to. Does the water jug need to be refilled. 

All that is possible 

with a I so I allows us to have the power of not just what we can detect today but be able to expand that possibility into what we're able to detect tomorrow. I want to share a couple of interesting data elements with you now that we have a lot of you know customers Fortune 1000 that have generated really valuable and accurate person account data 

so across these companies these 10 companies you know Grant six months of data we polled 44 percent of meetings or one person meetings regardless it's conference room size 34 percent of meetings were two person meetings and only 22 percent of the meetings that we saw were three people or more. We all know there is a right sizing problem but being able to quantify it and attack it from actually how big the problem is it is pretty important data. We also do the same thing and understood a new trend of space which is unbreakable conference rooms. 

How are these performing so we found that you know unbreakable conference rooms collaboration rooms essentially are being used 73 percent of time by one person 20 percent of the time by two people and 6 percent of the time at 3 or more people. This is very insightful because while unbreakable spaces are significantly higher utilized than about conference rooms because you don't have ghost meetings you know squatters what you have to do is you have to design the space to account for the types of usage of these spaces they should have less square footage allocated to them because this is how architecture using it 

there's some very interesting data that we're starting to pull and see this. I actually found this to be pretty interesting for Book of confidence. We found that the most common meeting size is 30 minutes. And this is you know a lot along the lines of what you'd expect but for unworkable conference rooms because we're measuring person count and actually have this data reliable data. We saw that meetings were 10 minutes long most common. So maybe we should be using this design for better more comfortable furniture for short stays for poor standing meetings etc. 

So the last thing I'll leave you with is with the power of computer vision we're not only able to answer your question of today which is how our space is being utilized what are people doing. What is the experience how can we improve it but you can invest in an appreciating asset instead of a depreciating hardware device that can actually answer your questions tomorrow. Thank you 

Andrew Farah: People Are Weird

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Andrew Farah is the Founder & CEO of Density, a sensor technology company who measures the, at times, unusual behavior of people and how they interact with the space around them.

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Andrew Farah, CEO, Density

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VIDEO TRANSCRIPT:

My name is Andrew Farah Co-Founder and CEO of a company called Density. My talk is called People are weird. So I'm going to explain a little bit more about what we're going to go through today.

So first off, the population has grown into a fixed amount of space, like we're not creating more earth. So the way that we solve that problem is obviously by building in three dimensions. This is kind of a staggering number. Now this is 10 billion humans by 2040. But this curve actually shows what would happen in the event of some serious catastrophe. So we're going to skip that and sort of look at the general trend is up and to the right.

It turns out that you all are very weird. You walk in different directions. You bring stuff with you. Sometimes you even will hide in your natural environment, so these are like beneath hinges. Often times there are packs of people and you tend to bring plates with you which is very difficult for us to count. This happens usually very late at night about 2:00 o'clock in the morning. People come by and pick up all the stuff that we've left behind. And then sometimes you bring your dogs, and that's also very challenging because that's an organic object inside of a space where we should be counting the human. OK. So how we know all of this is that we built a people counter.

Density is essentially a space analytics company, we measure how people use space inside of large corporate buildings that we work with predominantly the Fortune 1000 and we build this device. And so it gets mounted above an entryway, it is powered with PoE (power over ethernet) connected to the Internet and we essentially anonymously count entrances and exits as people go through space.

Kind of looks like this and can support any double or single entryway. There's a lot of complexity inside the device. It looks super simple. I'm not going to go into the engineering behind it, more years of my life have been poured into this than I care to admit, but all this happens locally so none of this is streamed to our system. Instead it's just happening on the device and we process plus one minus one and all the errant behavior that humans exhibit inside space.

We built this because we just wanted to know how busy our favorite coffee shop was when we first started about four years ago. It turns out it's a much more interesting problem when you deploy this into really large corporate space just because the size of the the square footage is colossal. This is observed behavior about 40 to 60 percent of all entrances to secure doors include tailgating. If you're familiar with tailgating it’s just essentially two people going into a secure door and it's typically because someone's being polite and there's holding the door for another employee. But that's a problem, it's a very serious problem. In fact it's so much of a problem that they've created these ridiculous products called people leaders. Does anyone know what a people eater is? It is not this.

This is definitely not it although as much as I would love a giant purple person to come running after the person who tailgates. It is also not this although we're getting closer. It is not a door. It's actually this. This is the people here and this sort of ensures that only one person goes through an entryway at a time. Do we know what a man trap is? OK. This is not a man trap. This is a bear trap. This is also not a man trap. This is a mouse trap. This is a man trap and these are both very unfortunate names for products.

But this is how we solve tailgating today. You'll see these at airports where people will go through and it can ensure that only one person goes through. So this video actually came from one of our partners who solved tailgating in a slightly different way. They deployed our product on the inside of the store and as the person goes through there using our API in real time, like 400 second latencies spare a milliseconds, very very quickly count the number of people who go through and then compare it with the badge data. And if there's a discrepancy, they take a photograph. We don't build the camera but they set up a process that takes a photograph. I was really hoping there might be like a trapdoor or some other type of interesting thing like a net.

So we periodically will do space studies so it will take data and help answer what to deploy into different rooms and then we'll analyze the data and we'll provide a customer with what's happening inside their space. We answer questions like are people using these conference rooms? Is the conference room or space sized properly? And what are the most used rooms or least used rooms? So we are going through this data but we were going through this with one of our customers and we sort of pointed out that one of the rooms that they had was essentially used by two people but it was designed for 12 and it is a really large space and they decided that they were going to break it up into essentially a space that was more like a lounge.

And we sort of went through each of these rooms and we landed on one of the last ones. We said this one is actually optimally used. It's designed for four people it's consistently used by three or four people and it's the most popular room.

Now we have no idea why but it just is. And they said oh my god it's the television. And we said what does that mean. And they said well it's the only room that we put a television in. So everyone goes to that room because there is a television there. Now I'm not suggesting that you should put televisions everywhere, I'm simply suggesting that once you understand how people use space you can draw some very interesting conclusions about what to do next.

10.9 billion square feet. That's cumulative leased or owned corporate office space in the U.S.. It is an enormous amount of square feet. So periodically we'll go to the SEC and we'll scrape the 10k filings and just to pull interesting data. And one of the things that we found was that these companies own just incredible amount of space and they are constantly recalibrating, they're either constantly acquiring or they're consolidating. This is just a snapshot of the numbers.

You'd think with this problem of human population rapidly growing and our willingness to sort of solve the problem in three dimensions that we'd be constantly trying to catch up with the population but that's actually not true. So 41 percent of all leased or owned corporate office space in the U.S. is empty but paid for it. It's just not used. I mean it's not used. It's just empty. And the problem isn't that people don't know they have a problem, they know they have the problem. They just can't agree on which 41 percent. And so that's one of the reasons we get it we get a call periodically. The cost is roughly 150 billion dollars in the U.S. spent on space that's not used. And what's really cool actually about this is that the percentages are pretty consistent internationally. So 41 percent 39 percent 40 percent is pretty consistent although China is more like 28 percent although I’m not exactly sure how they did that. Japan is like is like 49 percent or something. It's really amazing.

Does anyone know what COPPA is? It is a federal legislation that came about in 1988 and it has to do with Child Online Privacy Protection and even updating this periodically, they updated it in 2013, they updated it in 2017, so as the technology has changed they've made changes to the rules. So you may not be familiar with COPPA but you may be familiar with how YouTube requires you to be a certain age or certain systems require you to be a certain age. This is why. And I bring this up for a particular reason. COPPA has never encountered smart cameras before. When you encounter smart when you sort of mash up smart cameras and the requirement to have parental consent on any data that you're collecting about someone who's below 13, then you run into some pretty interesting issues. As you think about sort of your space, public spaces are perfectly OK with cameras but you should sort of be mindful as you're deploying cameras inside of spaces. I don't believe that most of you are are employing 12 year olds but just something to bear in mind.

So we did a deployment inside of a large corporate in a financial institution and it was the head of global I.T. who was our was our primary point of contact and he had a bunch of engineers that were milling about and this is a couple of years ago and we had deployed one of our devices which is about four times the size of the device that I had here is a prototype that we're collecting data trying to understand how the space is being used and also just trying to improve accuracy. And ahead of I.T. looks at the the engineer and says “Hey that thing you're looking at it's a camera and it's spying on you.” And he was he was joking. And this is what the engineer did.

The thing that was very interesting about this, is that this is culture.

This is not rules. This is not policy. This is not your employment contract. This is what people feel and what's really funny it was so he turns around because we were laughing we're about ten feet behind we were on our laptops and we were like “Oh hey we heard laughing over want to show you what you look like on the device.” He came over and we showed him the algorithm we showed him the the depth data this is all depth data. And and he started laughing like man that's so cool like you have no idea who I am. I can literally stare up at it and have no idea. So anyway I just sort of another point is you really can't put cameras in conference rooms you really have to be able to protect privacy especially inside of secure facilities and so building something anonymous was very important to us and it's very important to the Fortune 1000 that we work with.

One last story and then I’ll wrap up. So we're in all U.S. cafeterias, culinary has sort of been a an interesting space that we work with heads of global real estate who we're trying to consolidate. We work with facilities managers who are trying to automate cleaning rooms. So it turns out that we clean rooms that are clean as opposed to clean rooms that have been used. So we help automate some of that. We also work with heads of workplace strategy who are trying to understand how to optimize space or better improve the space design or the furniture that goes into that. And we also work with culinary which was surprising to us. So we get deployed into this very large floor, there were five entrances to one cafeteria and we we started counting over a period of time the number of people that go through each of the points of entry and we can we reconciled count for that one space. And when we looked at the data we showed up to a meeting and we we presented the client with data. They had 91,000 entrances and exits through one door. One of these five doors over 120 day period. The next door over had 131,000 entrances and exits over the same 120 day period and then two, not one, but two doors to the elevators had 515,000 entrances and exits over the same 120 day period. They employ 5,000 people like it's one floor. It's five doors.

And we told them this and they said you’re lying. And we said we're not lying. It's 96.68 percent accurate or whatever it was at the time.

And we start going back and forth. They immediately deployed US sort of nationally which was cool but but the thing that I thought was really neat was one guy spoke up and said oh my god I think that's why our hinges are failing the doors just kept getting opened and closed and opened and closed.

So the point is your space is big, people are weird and it's totally normal to not know what's happening inside that space. And I think if there's sort of anything that I would leave everyone here with it's just simply that as you're thinking about space like why build any space without knowing how it's used thank you very much.