Founders 10x10: InSite CEO/founder Davor Kapelina
For the past year, Impala Ventures has vetted over a 100 technology investments for the built environment with an interest to resolve one of the hardest problem sets real estate professionals have been trying to solve for in buildings for decades. The problem and vast opportunities focused around the central, all encompassing topic of “Data”—big, complex, multi-variant, diverse and fragmented DATA that each building produces. How to leverage data to make better, faster and more predictive decisions has been the quest for countless technology startups and investors like us looking to back winners.
For most real estate organizations, the biggest barriers faced are not in extracting data from their buildings but it is in the organizational struggles internally that prevent a holistic understanding of data architecture and how to incorporate data-driven insights into day-to-day business processes. While this seems like a simple problem to fix in an era where artificial intelligence and machine learning capabilities are thrown around with greater velocity, real estate as an asset class is starting to catch up to other more technical industries (datacenters, biotech, telco) that have been developing and embracing disruptive technology for the better part of this century.
Data analytics capabilities have made enormous quantum leaps and they are starting to transform real estate just now. Our quest has been identifying technologies that can synthesize every data point and newly developed orthogonal data sets from collection, aggregation and analysis in an environment where data is still a “proprietary” asset of industrial incumbents. Before we discuss our quest further its helpful to dig into the problem a bit more and how we arrived at our conclusion.
For starters, buildings are hard puzzles to decipher and to master their operational efficiency even fewer succeed. The shear volume of available data produced by these buildings has also grown exponentially, most recently data science has finally brought forth more sophisticated algorithms and computational power and elastic cloud storage which has made this convergence possible, but for building owners and managers, selecting the tools to unlock business intelligence is still a complex decision that most in the industry are less equipped to handle.
In industries such as real estate, which is still dominated by industrial technology incumbents (Siemens, Honeywell, GE, etc.) owners have become used to relying on very standardized data sets to make decisions. Legacy BAS systems are not short on spitting out reams of standard data with little actionable intelligence to speak of. However, a new fresh perspective can augment the standard data sets by layering in powerful "orthogonal"data which is starting to yield a meaningful challenge to these incumbents who are very protective of their “proprietary” systems and business models. Because of this dynamic, most real estate owners/operators are capturing only a fraction of the potential value from the data that is rich within their walls.
Our quest has searched far beyond the mere“IoT” platforms that have garnered all the rage the past 5 years in the race to provide actionable intelligence to building owners. Each of these IoT solutions have fallen short of the challenge. While very capable at extracting data from legacy systems and serving it up in pretty, colorful graphical interfaces (dashboards) each of these technology solutions have had little success operating across all realms of data that a real estate organization must leverage to make decisions.
In our analysis, research and in-depth meetings with most all of the “IoT” solutions that focus on real estate, only a few have figured out how to ingest a broader set of data from financial systems, work order management, occupancy, HR, security, weather, sustainability and tenant platforms. Their value proposition is still isolated to systems that consume “energy” or other utilities with limited views into other vital data sets that decision makers need to make better decisions. A limited set of IoT providers with a rich academic history in data science have introduced modules with multi-variant analysis and we continue to be impressed by these select groups and will at some point invest in a the next generation of IoT solutions.
IoT platforms must do more than collect data, they must further measure its performance against benchmarks and that data must flow from the building asset collected by a mesh of sensors all the way through the value chain, from operator to investor in a unified view. We call this concept “Sensor to Investor” architecture that is just starting to be seen at scale in the industry where a multi-variant data set is being analyzed for the information at it's intersections. These multi-variant data sets with the use orthogonal data (a linear algebra expression to denote independent random variables, which are considered to be at “right angles” to each other), and where this data converges can be interpreted with a new insight.
For example in an office building dependent variables such as temperature, humidity and air flow are variables analyzed that can yield insights into “tenant comfort”—an orthogonal data set would look at the smart lighting system to detect the tenant occupancy of a space which is a very independent variable from environmental data. But where the data sets intersect can produce powerful operational guidance that an area in a building with high occupancy, high temperature and high humidity will typically trigger a “hot call” from a tenant who wants the space cooled. Consequently if this same analysis used information from the tenants occupancy system and saw that the number of employees in the space was projected to be low during an upcoming holiday week, the intelligence may be served up with a very different outcome.
Enter InSite, an enterprise grade data analytics and business intelligence platform designed for buildings, agnostic to the hardware, the IoT, and the financial ERP platform the buildings operate—they ingest data from hundreds of sources commonly used through a portfolio of real estate. The technology has been built by one of the smartest engineering and energy group of experts in the industry. InSite is the creation of the brain trust team at AtSite, the professional engineering firm led by visionary founder Davor Kapelina. I’ve known Davor for a decade from the early days of LEED 1.0 when his group was the leading project management firm in the industry driving sustainability into the forefront and working closely with the USGBC to develop the EBOM standards.
Recently, I sat down with Davor over lunch in Washington DC and discussed the changing landscape in data analytics and how InSite technology platform makes it easy for asset owners and operators to deploy at scale with de minimus CapEx to make decisions across a portfolio of real estate. Faster to market and faster to deployment will win the day suggests Davor.
Tell me the genesis story of your company? What was your initial motivation to pursue your vision?
Simply put, I find the intersection of the digital and physical worlds to be a place full of opportunities and challenges and it strikes me that buildings are in desperate need of digitization. And the nexus of that opportunity and my vision is InSite. Many years ago, I founded a facilities and real estate services company called AtSite through which I have brought innovative, forward-leaning ideas and services to organizations. While I could wax poetic about how I developed my vision for InSite, the motivation and vision evolved organically by both experiencing and witnessing a severe chasm with how buildings are currently built and operated and how both can be done much better.
What person in your academic or professional career influenced you to get into high performance buildings?
I’ve had many influential people in my professional life and each one of them has inspired growth, change, and innovation in one way or another. But, I think the biggest driver for my pursuit of high performance buildings has been my children. Suddenly, I became obsessed with waste and sustainability and sought to do what I could personally and professionally to make a difference. I took many steps at home, but I wanted to make a bigger difference. Through that journey, I became much more aware of the challenges owners and operators are facing and how much the industry needed to change. Being someone who is always looking for ways to do things cheaper, better, and faster – bringing a digital solution to market through InSite enables exactly that.
Leading a company requires vision, how do you motivate your team to keep them focused?
It starts with finding people who are aligned with the vision and share a relevant passion, which hopefully takes care of motivation. If I have to motivate people every day to run up a mountain– then we don’t have the right people. For me, focus comes from keeping the priorities straight and keeping an eye on cash flow – as we like to build from within. Given there is so much to do, and never enough time or money, it’s all about picking what is the highest priority, staying consistent with strategy, and guiding everyone forward. And of course, pizza and beer help too.
Share with us some your most critical experiences starting out, raising capital, and recruiting for your venture?
I find it very interesting that the playbook for starting and growing a business is pretty much a known quantity, but somehow each entrepreneur must find their own way and often make the same mistakes that others have. Recruiting is a great example of this. We all know the best people are the necessary gasoline to the embers of a start-up. Yet we often cannot afford, attract, or charm the right talent in those formative times – so we make the mistake of hiring for the moment, as opposed to hiring for the future. While we have raised little capital (as most of our investment and growth has come from within), things always take longer than what one thinks or hopes and capital sure helps solve a lot of problems – but can also engender terrible habits.
What are some of the technology advances and changes you envision in the next 5,10 and 20 years in your space?
I see the next few years as being groundbreaking not just in the obvious areas of AI and Machine Learning, but also robotics and augmented human tools specifically in our space. The use of these technologies is and will continue to transform existing processes and create unparalleled experiences for the occupants, users, and operators. Not only will this provide a huge business advantage in future, as organizations continue to push the bounds of domain-specific applications (like image recognition and natural language processing), but as the algorithms get smarter and more adaptive, there won’t be an area that doesn’t incorporate some form of Machine Learning.
What are some of the ethical questions you think about as Ai, big data collection and robotics will have on our privacy?
I believe there will be a big challenge, and perhaps a large opportunity, dealing with the numerous ethical issues that are and will surface as we continue advancing tech and AI – privacy being just one. In my mind, the big problems will not stem from privacy, per se, as much as from the decision-making that advanced systems enable or even execute. Therein will lie the ethical and moral dilemmas that will rightfully scare people into action against the rise of the machines. As an immediate and concrete example we are seeing already, the inevitable advance of autonomous vehicles will soon be followed by case after case of decisions that resulted in injury or even death. While humans might have made the same decision, perhaps even worse, the notion that a machine coldly did so and executed the action will be very hard for people to tolerate.
What are the characteristics you look for in talent that you recruit into your company?
We look for really smart, hardworking people who have a passion for technology and innovation primarily, but also for a real desire to make a difference. We have been very lucky throughout the years to find individuals who love to innovate and who love to be part of an organization full of people who are making a difference.
What are your most rewarding moments as a founder?
Having been an entrepreneur virtually all my life, I have experienced many cool and rewarding moments – along with very, very challenging ones. One recent and exciting moment was the launch of InSite 3 last summer– where we peeled back the covers on our Enterprise-scaled intelligence platform – capturing years of developing and innovation.
What causes you the most stress and how do you manage these episodes?
Lots of things – Namaste! I firmly believe in sweating the details and always covering your downside. The biggest issue for me is customer satisfaction – because without customers it’s really hard to succeed in business. But, bringing in very talented people helps immensely, as it’s comforting knowing other team members have their eyes on the ball and will deal with issues with urgency and diligence - often better than I would.
What big things are in store next for you and the company?
We don’t have enough space for me to answer this question. But to keep it short– i’ll sum it up as connecting everyone on Earth with InSite, and a few other minor goals…