Podcast #214 Building Automation

TRANSCRIPT

Ken: Good day, and welcome to episode 214 of our Momenta Digital Thread podcast series. Today, I'm pleased to host Alessandro Araldi, President of Nokē and Chief Strategy Officer at Janus International, the 1 billion revenues publicly held global leader in solutions to the self-storage industry. Alessandro brings over two decades of experience, featuring a record of innovating and commercializing building technologies on a worldwide scale. He joined Janus from Honeywell International and held leadership roles in high-growth business lines, including Honeywell Building Technologies and Honeywell Security Group. Before Honeywell, Alessandro was a partner at CSK Venture Capital in Tokyo, led Product Management for the Mobile Microprocessor Platform at Texas Instruments, and was a consultant within the telecom and IT practice at the Boston Consulting Group. He has a Master of Science in Electrical and Telecommunications Engineering from the University of Bologna and a Master of Business Administration from the MIT Sloan School of Management. Alessandro, welcome to our Digital Thread podcast.

[00:01:46]

Alessandro: Thank you, Ken. Thank you for having me.

[00:01:48]

Ken: It's a pleasure to have you, and believe me, given that great background, you've got a great subject matter we can talk about. As you know, we call this the Digital Thread podcast. We always like to start by asking, what would you consider to be your digital thread? In other words, one or more thematic threads that define your digital industry journey?

[00:02:07]

Alessandro: Yes, sure. I started my career in the telecom space, developing next-generation mobile networks and services. Then, I progressed through the semiconductor industry with Texas Instruments, still focused on mobile developing application processor platforms for first-generation smartphones. These were the days before the iPhone when Nokia and Motorola remained the leading OEMs. Then, eventually, I found myself in the industrial IoT space with Honeywell first and now with Janus, with a focus on industrial controls and automation. First, at Honeywell, in the security and life safety space, and today, with Janus in self-storage, digitizing the self-storage experience globally. It's been about technology, a different flavor, but mostly centered around complex engineering systems, and that's what I'm most passionate about.

[00:03:10]

Ken: I always appreciate diversity in a career, and yours is interesting. I'll call it full-stack going- that you started off consulting at BCG, running a microprocessor program at TI, managing partner of a ventures firm, to General Manager of Honeywell's Building Technologies Business, to what you're doing at Janus now. I have to ask, to what do you attribute this- I'll call it 'professional wanderlust'?

[00:03:35]

Alessandro: Yes, it's ultimately simply two things. On the one side, it's a passion for technology and figuring out how you can apply technology to help reshape a user experience in different industries, and at the same time, a passion for learning across disparate fields. Those two trades have defined my career and led me to choose different opportunities where I could apply new technologies and use them to create new compelling value propositions and business models, but also continue to learn. Those are the two things that drove me to choose what- on the surface, may appear to be quite different experiences, but there is this common thread that brings them all together.

[00:04:25]

Ken: I like to use the term full-stack for those who have lived all parts of- I'll call it the technology stack, but you also have this interesting aspect of coming from a consulting background and venture capital. As a venture capital firm ourselves, I always appreciate people whose journey has led them through or to the trade, as it were. You were a managing partner at CSK Venture Capital in Tokyo, Japan, from 2006 to 2010. What attracted you to venture capital, and what were some of the highlights and lessons learned from the time?

[00:05:00]

Alessandro: Well, first of all, my wife attracted me to Japan before venture capital. My wife is Japanese. We met in business school, and after getting married, we decided to spend a period of our life in Japan. We moved from the US to Japan, and I've always been interested in entrepreneurship. I have a great deal of respect and admiration for entrepreneurs; my father was an entrepreneur. He started one of Italy's first schools to teach computing in 1969. These were the days when you still had punch cards and the large floppy disk. I remember my brother and me growing up, attending school and helping my dad with anything in the company. Between promoting the company, setting up machines- anything that was needed. That experience, again, led me to develop this great admiration for entrepreneurs and respect for all their daily challenges. When I moved to Japan and the opportunity presented to join CSK Venture Capital to lead their investment portfolio outside of Japan, I jumped at the opportunity. The biggest learning from that experience is twofold. Specific to venture capital is the complexity of developing a robust deal flow. Being in Japan was a challenge for me, but investing outside of Japan and trying to craft a value proposition for our firm in investing with other firms or just being able to attract entrepreneurs to partner with us. At the same time, I think it also helped me- this whole experience, develop an acute sensitivity for all the things that have to go right in venture investment to succeed, which is something that helped me later on in my career to pay attention to all different aspects of a business, from people to strategy to value product and so on. Those are the key learnings and lessons I took away from that experience, and they continue to help me throughout my career.

[00:07:23]

Ken: It's a great answer. A common misnomer from those outside of venture capital is that it's all about the investments. In reality, you hit on the bigger points, and that is a good solid deal flow to find those great investments and then post-deal value creation. Never underestimate the work that post-deal value creation creates because you often take board positions; if nothing else, you're mentoring those founders. They're your investment in helping out in every aspect of the business. It's the part that often is underrated relative to what separates successful VCs from those- runs also. It's great to hear those lessons are well-embedded. You spent almost 12 years at Honeywell across their security and business technology business lines. Tell us about your company remit and what you are most proud of.

[00:08:18]

Alessandro: Yes. I mean, Honeywell- it's truly a fantastic company. That's where I learned the most throughout my career; I also spent the most time. It's the largest- most people don't know, but this is the largest industrial company by market cap and a fantastic forming ground for aspiring business leaders. I started in what is called strategic marketing, which is a combination of more traditional marketing and strategy in the security group. I eventually became the global CMO for that business, which evolved into a large product management role and a GM role for a portion of the fire life safety business. My entire career at Honeywell has been with what used to be called Automation and Control Solution, and today, it's called Honeywell Building Technologies- so really, developing control automation and building technologies and industrial IoT. I think that the biggest, again, the biggest thing that I learned is how to look at and effectively manage a business, understand the different levels, the economics of the business, and maybe tying back to the question before, paying attention to all the different aspects of the business. That's something that I developed an incredible passion for; this idea of being able to take a business and make it better over time and seeing it grow and flourish is something that I'm passionate about.

[00:09:56]

Ken: What makes your role particularly interesting during that time, especially relative to building automation, is when you look at the disruptions in terms of pure digital plays that came the direction of the industry. Think of the Nest thermostat as an example or Ring doorbell, right? The movement of consumer-grade IT technologies into setting higher expectations relative to- call it smart and connected buildings. I'm curious. From your perspective, what was the impact you saw from the emergence of such digital technologies? How do you think this has changed your trajectory of building automation?

[00:10:34]

Alessandro: There's been tremendous- it has completely reshaped the industry. By the way, that's common to any industry where you transitioned from analog to digital. If you look at specifically the case of building technologies, I think the transition from analog to digital controls and interfaces, and then the transition to connectivity and Cloud has transformed, fundamentally, the user experience, but also has made a lot of this technology cheaper and more accessible to be deployed on a larger scale. I think two examples that I would bring that I lived through firsthand and taught me quite a bit are the transition from analog to digital video surveillance- that completely reshaped the security industry with the emergence of digital video and today, the dominance of, essentially, Chinese player Hikvision and Dahua in the industry, but also subsequently, the emergence of video analytics. One of the key characteristics of digital is that you can manipulate the information, which is at the core of video analytics. You can take a video stream and manipulate that information to add significant value. The other example is the evolution from non-connected to connected thermostats, with the emergence of Nest, which has completely transformed home automation. Again, this notion of moving to digital has helped and continues to help another industry transform the user experience. Still, also, by lowering cost, it enables a much wider adoption of the technology.

[00:12:32]

Ken: I remember a chart running around Silicon Valley several years ago. It was called "The Deconstruction of Building Automation." It talked about Nest and then talked about all of the traditional players in the various spaces- of course, Honeywell was there as well. Certainly, many people have been monitoring this space to see the changes. Let's go and jump into Janus International, which you joined in 2022. In addition to leading their corporate strategy, you are leading the Nokē is spelled N-O-K-E business line. It's an industrial IoT business transforming the self-storage user experience through digitization. Tell us a bit about your role and the focus of Nokē.

[00:13:15]

Alessandro: I joined Janus at the beginning of this year, and I have this dual role of leading the Nokē business and strategy for the company as a whole. Concerning Nokē, it's truly an interesting set of technologies and solutions. Today, we're focused on self-storage, with a focus primarily on the access control kind of application. We're transforming and digitizing the access control experience to self-storage. It is transforming, as we speak, both the experience for the tenant or the people who rented these self-storage units, as well as for what we call the owner-operator. These are the people who invest in and operate these facilities. There are very distinctive value propositions for both that are compelling and, quite frankly, quite easy to explain. The main challenge here is the technology. The technology is extremely complex, despite what it may look like on the surface. It's an industrial IoT solution at scale, connecting these devices in the field in disparate environments because these sites are all very different.

Each one is unique. You have an indoor facility; you have an outdoor facility. You have single-story, multi-story. They are located in different weathers, so it's quite complex. We have two wireless technologies embedded between Bluetooth and mesh technology. We have connectivity to the Cloud, physical product hardware, a web portal, and a few different flavors of an app. It's a complex technology and getting that right to work reliably- it's the key challenge here. My focus has been on the customer, both what I refer to as the owner-operator and, ultimately, the tenant, and making sure that we continue to improve the user experience for both. Ultimately, that's what it's all about. If we can do that consistently, day after day, the results will continue to come. We are growing rapidly and have a five-year time-to-market advantage over anybody else because we entered the industry and developed the first solution almost five years ago. Therefore, we've accumulated a tremendous amount of knowledge and lessons learned. I would say, ultimately, beyond just focusing on the user experiences, when I look within the company. What we do daily, I focus on essentially strengthening the three Ps: people, products, and processes. Hopefully, making those better day after day will result in superior offerings for our customers.

[00:16:28]

Ken: Speaking of these superior offerings, I'm curious. What have been some of your notable use cases and wins?

[00:16:36]

Alessandro: There are some very interesting use cases here. I mentioned, for example, one that has a lot of value for the tenant. For the end user, using this solution, which is this notion of- well, first of all, they can now go to a facility and access the facility using their mobile phone. They don't need to carry a key. Believe it or not, most self-storage facilities still require a key or combination you need to remember. You don't need to remember anything; the ease of use has improved dramatically. But a very interesting feature and benefit of the technology is key sharing. Key sharing means digitally sharing a key to the facility and your unit with anybody you want or trust. A family member, a friend, or a delivery company. You can have somebody else go to your unit to drop off or pick up something, and that's a tremendous convenience. For the owner-operator, it's about now being able to monitor and potentially manage your entire facility from one place. It's all the information; it's at your fingertips. We provide all of that through a web portal, and what some of our customers have done has essentially moved to remote management of the facility, which is considered by many as the next evolution of self-storage. We have enabled a significant value proposition for the tenant and the owner-operator.

[00:18:31]

Ken: You spent a fair amount of time on digitization in your prior companies and your leading role- you probably got a good sense of both the opportunity and the challenges of digitizing an organization. Think about the cultural aspect primarily. I'm curious. Among your owner-operators and your tenants now, how do you know when an organization is ready to adopt your solutions? What best practices have you seen in them realizing that value?

[00:19:01]

Alessandro: Yes, we see two types of customers adopting our solution today. This will continue to evolve as the technology becomes accepted and more and more mainstream. But today, fundamentally, you have the owner-operator who has a business model that fits well with Nokē and maybe requires Nokē as the enabling technology, and those are the owner-operators, as I mentioned just a moment ago, that is pioneering this new model of remote or virtual management. You need a technology like Nokē that digitizes and optimizes your facility to do that and manage the facility remotely. Then you have another category of customer, which is what you would call the typical innovators or early adopters, who are essentially very excited about the technology and the opportunity to use the technologies, that way to provide a superior tenant experience and as a way to differentiate from the next the facility. We've learned much over the last five years since doing this.

We're now taking that know-how back to our customers and helping them maximize the return on investment by helping them either make the necessary adjustments to their operations and business models so they can take the most advantage of the technology or just by helping them explain the solution itself to the tenant so the tenant can be fully trained and educated on how to use the technology. In some cases, we also help them promote the technology itself, how you promote this new digital technology to your end user. We do that by helping them explain the benefits and some of the key use cases, as we discussed before. Those are some of the best practices we have developed over time, which we now take back to our customers.

[00:21:19]

Ken: I like how you portray that in terms of helping what I'll call the jump over the cultural boundary, many times adopting such technologies. One of the interesting things we've seen is the proliferation of consumer-grade electronics, or home security or home monitoring that has now become the basis for remote monitoring of things like Airbnb. I can see how this raises the expectations for any commercial property with which you're a tenant. I want to know if the door has been opened and to check the quality of the contents regarding environmental monitoring and things like that. In some sense, it's raised the expectations all the way around. I see the value you guys provide by helping the owner-operators get up to speed. Asking you to put your Chief Strategy Officer hat on- in addition to leading the Nokē business line, it seems commercial real estate is at a critical crossroads. You have post-COVID remote working, manufacturing, re-shoring to the degree that's raising more industrial plants or bringing them back online; you have the energy transition which we're all experiencing, the labor challenges- these are some of the trends we're watching as Momenta, but what are the key trends you're watching relative to the future of your industry?

[00:22:45]

Alessandro: If I look across buildings and commercial buildings, specifically, I see several trends, but there are three primarily that I believe are mostly reshaping the industry. The first one is, once again, centered around improving the end-user experience of what, in this case, I call the occupant experience: the person who physically occupies the building, whatever building that might be. How do you continue to improve the occupant experience and make it more attractive for that person to spend time in that building, but also more productive and make it a delightful experience, regardless of the type of use that building may have? That's one key trend. There are more and more technologies that do that, either through automation or digital interfaces, that are becoming easier and easier to use and more delightful. The other trend is using digital tools to provide actionable insights and automation that help building owners and managers make the building more profitable, which means finding ways to increase revenue or, in most cases, reduce costs. Lastly, one thing that I've seen that is quite interesting that doesn't get noticed is that the whole commercial building space is becoming increasingly specialized by vertical. You have accelerated the development of vertical-specific solutions. If you have a commercial office building, you have certain solutions tailored to that. If it's a hospital, you have other ones. If it's a hotel on an industrial site, you have some common technologies and solutions that apply to all of them. Still, you increasingly have specific use cases and technologies behind those use cases tailored to those different verticals. For companies focused on the space, it becomes difficult to be a leader in every vertical. There is an element of- yes, you can play the platform strategy and provide cross-vertical platforms, but increasingly, to be truly successful, you have to pick and choose. At Janus specifically, we're focused on self-storage, which generally applies to anyone who plays in the commercial building space. Those are the three trends that I continue to follow more closely.

[00:25:46]

Ken: Good, I like that. The occupant experience, actionable insights, and vertical solution focus. That's in there. Thanks to your leadership, it sounds like you guys are pretty well-positioned around all three of those. In closing, I always ask: Where do you find your inspiration?

[00:26:02]

Alessandro: I mean, it's a little bit of everything. There is just my day-to-day work, people I interact with, readings and articles, and so on, but mostly, I would say it's the people that I meet and people who have a passion for excellence and have been able to achieve outstanding results in their field simply by following your passion and being persistent in what they do in the face of adversity and challenges and setbacks. That's what fundamentally inspires me the most. Meeting one such person energizes me to do more and continue to carry forward despite what might be a daily challenge. Those are the things that I draw inspiration and energy from daily.

[00:26:54]

Ken: Well, you've done a good job of categorizing yourself in terms of your passion for technology, for learning- your perseverance, as you said. I appreciate you taking the time to share all of that with our audience today. It's been great to have you, Alessandro.

[00:27:12]

Alessandro: Well, thank you so much, Ken, for having me.

[00:27:14]

Ken: Alessandro Araldi, President of Nokē and Chief Strategy Officer at Janus International. Thank you for listening, and please join us for the next episode of our Digital Thread podcast series. We wish you a momentous day. You've been listening to the Momenta Digital Thread podcast series. We hope you've enjoyed the discussion, and as always, we welcome your comments and suggestions. Please check our website at momenta.one for archived versions of podcasts, as well as resources to help with your digital industry journey. Thank you for listening.

[The End]