Innovating Building Operations with Scott Sidman

About Our Guest

Scott Sidman

https://www.linkedin.com/in/scottsidman/

Scott serves as Executive Vice President, Business & Corporate Development at Building Engines, driving strategic growth through partnerships, mergers and acquisitions and their successful integration. He collaborates with all departments and customers on opportunities for market expansion while enhancing product value. Scott’s led sales, marketing and strategy in his career at Building Engines and writes and speaks regularly about the promise and future of technology for CRE. Scott began his career in the hospitality industry, learning about world-class customer service in management roles at Four Seasons and Intercontinental hotels. He then embarked on a diverse entrepreneurial path that included co-founding a real estate services firm, and a trade consulting business in Brazil. His start in technology was leading business development for Cedona Technologies, a company providing early hosted document and media archiving tools for consumer brands and distributors. Scott earned his B.S. from Cornell University.

Resources mentioned

LMRE website www.lmre.co.uk

UKPA website www.ukpa.com

Building Engines website www.buildingengines.com

Insights From This Episode

• I’d say it’s not the product, it’s actually the mindset of the customers that leads to adoption – Scott Sidman
• There wasn’t accountability, revenue wasn’t tracked appropriately, and certainly no data to inform business decisions. So those are the things we set out trying to improve – Scott Sidman
• It is aligning people and skill sets with where you’re at as a company, and where you need to get to next – Scott Sidman
• Change management is a key component of adoption – Scott Sidman
• Ease of use has always been an important thing for us, but more than ever customers are asking how quickly can I get up and running? How fast can I get our people using this without a tremendous amount of training and hand holding? So we wanted to make that even better than ever – Scott Sidman

Episode transcript

Louisa

Hi everyone. And welcome to the Propcast, my name is Louisa Dickins, co-founder of LMRE and board director of the UKPA, and I shall be your weekly host. Each week for 30 minutes, we will be connecting the VC, PropTech startups and real estate professionals globally, and assist in bridging that famous communication gap we all love talking about. So, sit back, relax and enjoy the show. Hi, everyone, and welcome back to the podcast. Today, we are speaking with the exec vice president in Business and Corporate Development Strategic Growth, Scott Sidman from Building Engines, and we’ll be talking about innovative building operations and how to reduce costs through technology. So welcome to the show, Scott.

Scott

Thank you Lu, it’s a pleasure to be here.

Louisa

Now, to give you guys all a bit of background, Scott drives strategic growth for Building Engines through mergers and acquisitions as well as partnership development. He’s also responsible for the successful integration of acquired companies. Now in his role Scott collaborates with all departments and customers and opportunities for the market expansion whilst enhancing product, company and customer value. Scott has led sales, marketing and strategy in his career at Building Engines and regularly speaks and writes about the promises of future of CREtech. Scott began his corporate career in the hospitality industry, learning about world class customer service management roles at the likes of the Four Seasons and Intercontinental Hotels. He then embarked on a diverse entrepreneurial path that included co-founding a real estate services firm, and a trade consulting business in Brazil, which he’ll be talking a little bit more about later. His start in technology was leading business development for Cedona Technology, a company providing early hosted document and media archiving tools for consumer brands and distributors.

So a fairly diverse background experience, and I think we’ve seen a lot of moving people from PropTech into this space, and especially in the year 2020 where a lot of people lost their jobs and now looking for a new career path. Scott, we can chat through that later about how you made all these moves and what your whole experience was there. But I’ll give the audience introduction to Building Engines as well. So Building Engines is a US born PropTech founded in 2000, which must be one of the not quite first generation PropTech like MRI and Yardi, but definitely been around longer than a lot of the businesses which people are hearing about. And now, the product improves net operating income across the world’s most successful commercial real estate portfolios, using their innovative building operation software platform Prism. Now Building Engines is developing inquiry and partnering to address long standing problems in building operations. And today, they have something crazy like 850 customers, including Beacon Capital Partners, Cushman and Wakefield, Jones Lang LaSalle. And they are relying on Building Engines to manage critical operational needs across more than 2.5 billion square feet and over 26,000 properties worldwide, which is a lot of property, Scott! So Scott, enough about me talking, and talk to the audience about how you first got into PropTech and how you got into Building Engines as well, you must be one of the first hires?

Scott

I was, I was one of the early ones and thank you for the background. It’s always interesting to listen to that and reflect back and think about the career, you don’t do that too often. But as you note, it’s certainly a nonlinear, non-traditional career path in general, but also in a PropTech. But I think it’s served me well, and I think that the combination of experiences, different industries and working with different people certainly served me well in this one because commercial real estate and PropTech is just such an interesting amalgamation of both segments within segments, and different personas and people and companies, and I think having that experience in different industries has really worked well for me. so my path to Building Engines in PropTech actually came through one of the original co-founders of Building Engines, who I’d known for a long time was actually an old college classmate and that’s how I knew him. And we stayed in touch through the years, and he had a previous technology startup that was hospitality focused. And as he was building the business and starting the business and looking for people with domain expertise, he reached out to me because of my hospitality background where I’d started my career. And asked me to help with that and help with position, and go to market for the business.

And that was my first entree into technology and was pretty quickly bitten by that bug. And we ended up repositioning the business, actually a complete flip from their hospitality focus to what ended up being Cedona technologies, and we repositioned the company in the business and he had a small but successful exit. And that was great. And then this was co-founder was obviously and an idea guy, a startup guy, and had the same idea for a technology product and platform for the commercial real estate space. And when he started Building Engines, he asked me to join him because one of my other entrepreneurial paths was I owned the janitorial mechanical services firm and was selling to commercial real estate. So I had experience in the space, we’re a mid-sized local regional firm in the Boston area. And he asked me to come in, build a go to market plan for the business, I was the fourth or fifth employee outside of engineering at the time. The core engineering team that developed the product came in was hired as a consultant, but really liked what the company was doing and in particular, some of the people that were involved and the next thing you know, 16 years goes by.

Louisa

And here we are now on The Propcast! When you first started selling into real estate with not direct real estate experience, how was that? Because everyone talks about it being a challenge now, but surely 16 years ago, that must have been even more difficult?

Scott

Oh, yes you can’t imagine. It was really difficult. So it was it was boots on the ground, going into the offices, meeting with people, selling. Old school, blocking and tackling, meeting with people and telling the story and overcoming a lot of objections. It’s probably very hard for a lot of folks to imagine now, but this is back in the day where the majority of work and relationships in commercial office properties in particular was done by telephone call or stopping someone in the hallway. Think of real estate management, the history of that business and how long that’s been around. And, and the way that the way that organizations do things, and everybody believed it was the relationship, the one-on-one direct conversation that mattered and trying to disrupt that through the use of technology, the use of the Internet was blasphemous in many regards.

So you had to overcome those objections, but these are the days where maintenance staff worked with clipboards and big binders of tasks and fax machines, if they were lucky. And management teams where it was “Call me on the phone or stop me in the hallway, and we’ll take care of it for you.” But there were a lot of problems with that, there wasn’t accountability, revenue wasn’t tracked appropriately, and certainly no data, to inform business decisions. So those are the things we set out trying to improve.

Louisa

And since you joined Building Engines, your responsibilities have changed, they have massively increased – I don’t know how big your team or remit is, but talk us through what your role encompasses.

Scott

Sure, so you kind of talked through the early days, I initially was focused on sales and marketing, and in sales and marketing it was selling first. It was getting out there and knocking on doors as I talked about, leveraging some relationships and trying to hone and craft the story that would resonate with the marketplace. And from there, built out our first sales teams and took that through several iterations. And then developed a marketing program based on content and thought leadership, which was very unique and different in the early days but we gravitated towards that. And I gravitated towards that personally, as I thought a capital efficient way to grow which was then a very bootstrapped business, and it turned out to be very effective for us. And so I spent most of my career Building Engines in that marketing leadership role, combined with doing some things in terms of account management, relationship building with some of our larger customers and executing on some of our larger license agreements, that kind of thing.

And I spent the previous three years to this role as our Chief Marketing and Strategy Officer, and then the opportunity came about to contribute to growth in a different way. And personally, one that was important for me because it represented another opportunity to stretch and grow my skill set, which I always find appealing and want to do, and think people should do in general so that was great. And that was presented in the opportunity to formalise this corporate development department where mergers and acquisitions and partnership program development are my responsibility. So it’s been super interesting, we started that towards the end of last year, formalised the department role at the beginning of this year, gives me the opportunity to build something from the ground up, which is great. It’s a poetry to hear what the market thinks about that, and to learn. So it’s been really terrific.

Louisa

It almost talks through the stages of how you should hire and grow a team. People who listen to this podcast, some of them are founders, some late stage, some investors, and there’s always that problem where businesses are trying to suss out what’s the next hire I make? We’re a small business, is it sales first? Is it marketing next? When do I start putting in the account team, the corporate team, the customer services team? You’ve gone through that over the past 16 years, what was your biggest takeaway, or maybe lessons learned in the past 16 years? It’s a big question, but off the top of your head!

Scott

Yes, that’s a great question. I think it is being very cognizant of the evolutionary stage you’re in, and where you need to get to in the company, and the requirement of the implication of what that means for the people you need on your team. And it’s hard because you have a team of people, a group of people that have taken you through this one successful stage, they may not be the right people to take you to the next stage. And you have to recognize that and make some hard decisions along the way. And I didn’t learn that on myself, it was it was taught to me by some of the great people that we brought in, certainly some of our board members and our CEO. And you have to go through those, and we’ve been through several, we’re probably just now in the next stage of that and we may talk about that later. But it is aligning people and skill sets with where you’re at as a company, and where you need to get to next.

Louisa

Yes, some people either come with you or they don’t, it’s big, tough decisions to make but every business has to make them as they develop. But speaking of development, tell us a little bit more about how your products developed. Obviously the topic is innovative building operations. Tell us a little bit more about the Prism product, Prism platform and what your software does?

Scott

For sure. Maybe it’s good to start with just a little background, it’s always been in our DNA as a company to be innovative. And we had to in the early days, because in addition to marketing that I talked about earlier, the product had to be unique and different. And we were competing with larger companies, certainly a larger direct competitor at the time, much larger and some other ancillary competitors. So we had to use innovation as the way we would stand out, and we have a long track record of doing that, of balancing customer responsiveness, marketing, market readiness and innovation fairly well. We made great bets on things like mobile app development well ahead of where others were in the market. We developed the industry’s for a chatbot product called Benji a few years ago, way ahead of where the market was ready but where we thought things would head to and it was a great little project for us to get out in front, and show what we’re able to do and customers in the market thinking about things like that.

But about two years ago, we undertook a complete ground-up rewrite of our platform. And that’s a hard thing for companies to do. We had at that point a 16 year old product or 15 year old product, and technology companies have to do that. You have to do that in general but we also felt it was important to address for our customers in the market where we thought things were going. So we’ve been this core operating platform that address tenant service, asset equipment maintenance, communications, and all the data related to that. It was a proprietary platform, we had some integrations, but they were always purpose built and it wasn’t easy. But where we felt the market was going was clearly towards the concept of interoperability. So that was the core fundamental tenet of the rewrite and the rebuild of our platform. So open systems, the ability to share data experiences, simplify things for our customers. So Prism, our new product, our new platform is built API first, and that’s the core fundamental concept to the application. The second thing for us was enterprise scale, not only to support the largest customers at a global scale. But we felt that, along with that security, privacy in those protections built in to the platform and making a significant investment, there were going to be your requirements. Prior to this, there are only a very few large customers have thought about that where I think today, every customer thinks about those things. So we have to support that. And then countervalue, ease of use has always been an important thing for us but more than ever, customers are asking how quickly can I get up and running? How fast can I get our people using this without a tremendous amount of training and hand holding, so we wanted to make that even better than ever. So that’s what we undertook and those are the changes we made.

Louisa

Yes, and you talk about ease of use, ease of implementation for your customers. Are you seeing less challenges out there? Are you seeing further adoption as your product gets approved and your client list grows every year, what are the main challenges you’re seeing in implementation at the moment?

Scott

Yes, it’s always a challenge, particularly if there’s change involved from other systems or processes, change management is a key component of adoption. So we’ve been fortunate in that we’ve always had strong adoption as a mission critical application for our customers. But we always know it can be better, we have over I think it’s 100,000 unique multiple users of the product. But we touch a lot of people in our customers organisations and with their tenants, so it’s always a challenge to do better, to get more people using the application. I’d say that for our customers, one of the things that is important as is the awareness and recognition of making sure that the product and application is deployed widely. So we spent a lot of time during pre-sales with our clients, making sure we have executive level commitment. And I’d say it’s not the product, it’s actually the mindset of the customers that leads to adoption. So there is this growing commitment to digital transformation at commercial real estate companies and if we have that at the beginning. And leadership matters, change begins at the top, all those things are very true, then for us it makes our job easier to make sure that everything we’re doing related to ease of use and simple implementations, and data migrations and all those things where we’re spending time actually can have an impact and take hold. But if we don’t have a commitment from the company, and leadership isn’t driving it, but it doesn’t really matter, because people revert back to what they’re most comfortable with and that’s the biggest obstacle always.

Louisa

I think yes, there’s a lot to be said for good and powerful senior change management in these massive businesses, but I think also what they come back and say as well, it’s down to your team marrying with the technical guys and the real estate professionals to ease them into it, so everyone’s communicating and then hopefully everyone’s slightly happier and more at ease. And now, Building Engines has been running since start-up, a few years ago they took private equity funding. Now, what was the whole reason behind that and how has it changed your business? Because you hear some horror stories with this, you had some fantastic stories of how you can expand globally, you get more money for headhunt, operations, tech. Talk me through the reasoning behind it and how it’s changed the business.

Scott

There were a few reasons for that. As we started to look at the landscape and what was happening in our business, we recognised there were a few headwinds taking place. One was that there was growing investor interest in commercial real estate technologies, they recognised that this is a giant laggard industry that could benefit from technology. So a lot of money started pouring in from venture capital, in particular into technology startups. And then there was growing recognition we saw among our customers who were becoming more sophisticated about what they wanted out of platforms, and out of technology companies. And we recognise that in order to execute on the vision we had for the business growth, we had to adjust to that.

And in order to do so and continue our growth path, we were going to need capital, and probably experienced growth stage expertise as well. So we knew it was pretty clear for us that was important for us to continue doing what we wanted to do. Also, we had early investors in the company, friends and family and some angel investors from the early days that had been in it for quite a bit. It was important to our CEO in particular, that he was able to deliver a return to them. So we started a process in 2015, we hired a banker, went through that evaluation period, then we started to entertain the impound interest. And for us, private equity was clearly a better fit based on the stage of a company we were at that time, and made a decision in 2016 to partner with our primary sponsor today, a company called Wavecrest Growth Partners, a local Boston firm with two principals who came out of Bain and Vista private equity. So very experienced, accomplished successful guys. They were small, so we thought we’d get the attention and focus we thought was important. They’ve been great partners, we get terrific guidance, you get the network benefit that they have. Certainly tough, but fair and as a result we’ve tripled in size since the investment. So it’s been it’s been successful across the board.

Louisa

It must be so difficult when selecting who to take investment from. And also you must learn a lot about your business as well, from whether you take VCs or private equity. But growing by three times, that’s fantastic so congrats. And I guess on that topic of growth, what further growth plans do you have for 2021?

Scott

Well as you would imagine, they’re pretty aggressive. Particularly, after coming out of this year and the impact this year had. Just like every other company, certainly COVID and the pandemic had an impact on our forecast and growth plans. So we took a bit of a step back, we actually overperformed against our adjusted expectations. So that’s been positive. But as we head into head into 2021, we have a pretty aggressive growth plan and growth track. And that for us, that’s accomplished in several ways. One is organic growth, certainly continuing to be really proficient, and excellent at sales and marketing execution, product development and making sure we grow in that direction. We hired a new Chief Sales Officer in the middle of this year, who’s tremendously experienced. And as we talked about earlier about evolutionary stages and what you have to do, and is working to improve and remake our sales organisation, so we’re doing that.

So organic growth, and then align with my role of mergers and acquisitions. So I’m actively looking at companies that make sense for us to acquire and incorporate into our platform. And then the other key component of Prism is that, again going back to that concept of interoperability is we launched a partner program this fall and developing an ecosystem of integrated partners. We have a directory on our website that showcase some of those. We also have a vendor network, we acquired a company last year that helps with bid management, RFP management’s per service. Along with that we have a complimentary network of service providers for our customers to choose from as well. So we’ll continue to grow both those things out and push forward.

Louisa

Very exciting, so I guess a fair amount of collaborations you already have going on. And Scott outside of Building Engines, how do you spend your time?

Scott

Well these days isolated!

Louisa

Any weird hobbies or things you’ve picked up during this crazy time?

Scott

The only thing outside of making sure how to take care of yourself physically and get outside and do those things as much as possible, I’m trying to figure out how to manage the ski season this year which is one of my hobbies. My wife and I have become expert mixologists. So, we have a Friday night cocktail ritual where we’ll try to be creative, whip something up new or take a twist on a different recipe and share that with friends and kids (who are older!) and family.

Louisa

I love that. My co founder, he’s celebrating his 30th wedding anniversary so a bit of an age gap between the two of us, but he said the key to his success and marriage has been Fizzy Fridays. So every Friday they make like a champagne cocktail or something together, have a bit of quality time. And Scott, we’re coming to the end of the podcast, what’s the best way for everyone to connect view and hear more about Building Engines?

Scott

Certainly, for me directly email ssidman@buildingengines.com. You can also find me on LinkedIn and Twitter @Scottsidman. I try to be very responsive and love engaging with people who want to talk about commercial real estate technology and always happy to have a conversation. And for Building Engines www.buildingengines.com a lot of information there as you would expect and ways to get in touch with us. And if you can’t find what you’re looking for there, the person you want to speak with, I can certainly help and connect you to the right folks here.

Louisa

Awesome. Well, look Scott it’s been an absolute pleasure having you on the Propcast today and I’m looking forward to catching up view after the show.

Scott

Likewise Lu, I appreciate the opportunity. Thank you and have a great day.

Louisa

Thank you for joining us this week on the Propcast and a big thanks to our special guests. Make sure you visit our website www.lmre.co.uk where you can subscribe to our show or you’ll find us on iTunes and Spotify were all good content is found. While you’re at it if you found value in the show, we’d appreciate if you could rate and review us on iTunes. Or if you simply spread the word. Be sure to tune in next Tuesday, and I’ll catch you later.