Making Workspaces Smarter with Dan Drogman and James Pellatt

About Our Guests

Dan Drogman

https://www.linkedin.com/in/drogman/?originalSubdomain=uk

Dan is a software development entrepreneur who first entered the market in 2004. He is a founding partner, owner and Managing Director at D2 Interactive, a London based PropTech, Software Development Consultancy ‘where design meets technology’ set up in 2010 and now employing 37+ .Net, C# software developers and UX/UI designers working across the office, retail, residential and industrial markets. D2i Provide specialist consulting services in IoT, API Development & Integration. Notable enterprise-level projects include reservation software for Marriott; the Peer-to-Peer foreign currency exchange platform Midpoint.com and their smart building platform Smart Spaces and loyalty programme Smart Rewards. He is a successful investor and sits on the Midpoint.com Board as Non-Executive Director.

James Pellatt

https://www.linkedin.com/in/james-pellatt-45619917?originalSubdomain=uk

James is Director of Workplace and Innovation at Great Portland Estates. He is passionate about making the most of available technology to make workplaces more healthy, productive and open for innovation. James is a board member for British Council for Offices, member of Research and Mentoring committees. His specialties are PropTech, disruption, innovation, workspace, development management, site acquisition and disposition, appraisals, project and construction management, planning, community, and sustainability.

Resources Mentioned

LMRE website www.lmre.co.uk

UKPA website www.ukpa.com

Great Portland Estates www.gpe.co.uk

Smart Spaces www.smartspaces.app

Key Insights in this Episode

• People need spaces that welcome them and they’re excited to be in – James Pellatt
• I think what makes the space smart is using technology to make life easier. So the smart piece is the technology working in the background to provide services to you, which are more accessible – Dan Drogman
• We’re trying to make schemes that fulfill our occupiers needs, and help users thrive by enhancing the everyday experience. And so we’re trying to take away the pain points every day from that journey – James Pellatt
• You start to create those cause and effect relationships where the building and the office within the building are working harmoniously – Dan Drogman
• I think success to us is a satisfied occupier. That’s ultimately why we’re doing this – James Pellatt

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 tall love talking about. So, sit back, relax and enjoy the showHi and welcome back to the Propcast, and today we are joined by Dan Drogman CEO of Smart Spaces and James Pellatt, Director of Workplace and Innovation at Great Portland Estates PLC, and we will be talking about how to make the workplace smarter. So welcome to the show.

Dan and James

Hello Louisa

Louisa

Now let me give you a brief introduction to our two guests. So Dan is a software development entrepreneur and CEO of Smart Spaces. He provides leading owners and developers of real estate with smart building solutions, working on a central portfolio for Great Portland Estates PLC, which we’ll hear much more about in a bit, Ashby Capital and many more accounts. Smart Spaces enables building owners to add an extra dimension to their services by its Internet of Things cloud based platform, smartphone app and digital twin, giving clients 360 degree engagement with and control of their office environment. From a secure automated entry system, to control of lighting and heating, and connecting with the office concierge, the technology is revolutionising the role of the traditional building owner and what it means to come back to work, which is hopefully fairly soon.

Now, James is Director of Workplace and Innovation at Great Portland Estates PLC, which is a reach with a focus purely on the ownership management and development of commercial real estate in central London. Now, Great Portland Estates have an open-minded approach to innovation and believe strongly in working with their suppliers to implement technology or innovation wherever it is to their portfolio. Great Portland Estates states were the first property company to roll out a workplace experience out across their portfolio, which they developed in conjunction with Smart Spaces, since they first started working together back in 2016, which is probably one of the first movers to really roll out one of these experience apps. James’ role is fairly varied but his role at Great Portland Estates is to observe emerging trends around workplace and combine them with the best available technology to ensure that Great Portland Estates product stays ahead of occupier need. So thank you both for joining the show, I thought maybe a good way for us to give the audience a better introduction to how you guys link together is Dan, why don’t you kick start us with how did the partnership between Smart Spaces and Great Portland Estates first come about? What’s the story behind it?

Dan

Definitely, thanks Louisa. So essentially a long time ago, when I was started out in this industry as a software developer writing software, such as we built actually the Knight Frank hotels data rooms to sell assets. And whilst working on those projects, we were working on a lot of commercial property marketing projects. And there I got introduced to Steven Mew who was at Mckay Securities, and Steven’s always been an early adopter of technology and passionate about technology, and so he always continues to be asking, what are we building, what are we doing, what are we thinking, what are we doing for our clients, can you show us what projects you’re working on? So really interested in the innovation side, and so we built a load of crazy different things. Space planning applications where you can design your office, applications to be able to provide offers into retail locations, and whilst doing that he actually got moving and go down from Mckay to GPE, and when he moved to GPE the focus become predominantly offices. And that’s where we got introduced to James, and GPE being the style of the business it was, was able to rapidly deploy our technology across their buildings.

And also the best thing was, they had that trust. I’d worked with Steven for such a long time, they could have that trust in us and really give us a free remit to go into their buildings and develop this technology. We just got given the keys to 240 Blackfriars and said, “Right, there we go make that smart” and so definitely, great to have that confidence in us. And working across the three early assets, that’s exactly what we did. I think now is probably a good time to hand over to James to say, because that’s when I started working with James and what happened next. So James, do you want to continue from where I got to?

James

Yes, that describes the background very clearly. And when we when I first met Dan, I had a different role as Head of Project, so I was responsible for the delivery of all of our development program. And so there was quite a lot of focus on the new developments, so as well as 240 Blackfriars, we looked at another building called 55 Well Street and the thing I was always impressed about with Dan was his can do attitude. And I’ve always been really excited by the possibilities, and I always get really frustrated by the inefficiencies within our industry. And so we started working project at 55, Well Street, which is a relatively small little office block. And if I’m completely honest, I didn’t really believe that Dan could deliver what he promised he could deliver. But with his tenacity and I think also the great thing about GPE is the open and fair attitude that we have. I wouldn’t say we just let him go, there was a bit more control of it than that! But working with some of my colleagues, so there’s many names to mention, but Ian the project manager for the building at the time, Steve Rawlingson the Head of IT, we all thought about this and thought about the logic and tried to make it work.

And it was bringing the expertise of how a building gets put together, how all of the intelligent wiring from the BMS works, and then Dan’s expertise and creating the API for building works. And it’s that collaboration, which has helped us to really accelerate. And so we did 55 Well Street, we sold that building, and then the next one we did was 160 Old Street, and we’ve just carried on and on. And as soon as we could show our colleagues 160 Old Street and show it working, we all believed in it and Steven, in the backer he is thought “Okay, we’re not just going to roll this into one building, we’re going to put it into everybody in the portfolio”. So now, every one of our occupiers has Sesame, which is our branded version of that workplace app, and it has different levels of smart and different levels of control, depending on the age of the building.

Louisa

James, could you tell the audience and describe how big and varied your portfolio actually is?

James

Because we are that world famous portfolio! Its one of our strengths I think, so we, as you mentioned in the introduction, we have a focus purely on central London. We are a real estate investment trust and we own about two and a half million square feet of offices and retail space across around 30 properties basically. So it’s a wide and varied portfolio. It’s from the west end to the east of London, but we have all different ages, types, new buildings, old buildings, buildings during the development pipeline. And so we’re always looking at the lifecycle of an asset and looking at ways that we can unlock potential to create space for London strike to thrive.

Louisa

And then now, Dan tell us from your point of view, and also you can delve into your point a little bit more, what makes a space smart? Surely there’s so many different elements to it.

Dan

Definitely. I think what makes the space smart is using technology to make life easier. So the smart piece is the technology working in the background to provide services to you, which are more accessible. And that could be accessing the building, for instance, on large buildings like 160 Old Street notes, you could have over 2000 people working in the building. Going to get your badge and pass for that building is quite an onerous process, a person needs to be introduced to the building management team, to the security office, a photograph needs to be taken, a plastic card needs to be printed, and there’s a sustainability element to that as well. And so what we’re able to do, just in the first instance, just through the access is by people self registering for the app in the App Store, getting an approval via the GPE management team that they are the person they say they are, and they have they work for the company do, they then get given their access completely remotely, so sent directly to their smartphone, and from then on they can access a building. So straightaway, you’ve streamlined that process, you could onboard 1000 people into the building easily in a few hours of the morning, the building open. So that’s where it starts and then it expands from there, into their space. But the key is, GPE provides a space but there’s services that come with that space.

So it’s a Cat A space they’re providing, there’s going to be lighting, HVAC, energy meters. Now, sometimes for the landlord or an occupier moving into this space, to get those services to work for them and at the same time GPE can’t give free control to a tenant taking one floor to the entire building. What our technology enables them to do is to access their services within their own space within the right parameters that still keeps the building energy efficient, gives them free control. So actually, they feel in control, they’re taking the lease of their space, they can control their HVAC from an app or from a web portal, they can control their lighting, and they can see their energy feedback. And then at that point, what we do is our platform expands and starts to deliver things like desk booking, meeting room booking, and that the benefits of adding that to our system versus using an external system is, when someone badges in downstairs on the turnstiles for instance, we automatically check them into their desk, we know they’ve arrived. So you start to create those cause and effect relationships where the building and the office within the building are working harmoniously, that just keeps getting extended and extended. For instance, if I create a meeting room booking, it automatically sends out the visitor invites to the external parties or creates a Zoom Room to the people using the remote video conferencing. So yes, that is what I believe makes the space smart, it’s technology working on behalf of building to make life easier.

Louisa

James, what about your clients, what do they look for in a smart building? And are there certain parts of the product which maybe get used a little bit more? Or are slightly more appealing to them?

James

So it’s a great question. So I mean, just if we took a slight step back, so the reason why we did this is not just for the sake of technologies, and it’s what are we trying to do. So what we’re trying to make our schemes that fulfill our occupiers needs, and help users thrive by enhancing the everyday experience. And so we’re trying to take away the pain points every day from that journey. And the workplace app is a good place to start at that point, but it is also combined with the aesthetics and what it looks like. So people need spaces that welcome them and they’re excited to be in. So it’s not just about the tech space, it’s got to be a “why do I want to be there, now more than ever, what makes the commute worth it?” And those spaces that are that are sustainable, focus on well-being and technology are all really increasingly popular things. You can’t say there’s one thing for one occupier, that that’s what they want, and we’re having to guess this, but those are the broad themes. And if we can get everything right then we know that we’re starting to stand out from our competitors. So the different features that we provide in Sesame, so we provide a basic offer of all the things that we’re doing. So this is a good example of how the benefits work. So we, one of my colleagues he introduced the concept of free magazines. So that’s why on Sesame, you get access to 150 different magazines from around the world, and so staff could download them at any time. That’s very popular, and you need to give people at least two or three reasons to use the app to really get engagement up.

So we’re looking to constantly offer you new info. So in terms of during the pandemic, we’ve introduced air quality sensors so you get an air quality feed onto your so what the air quality is like in the office, you know what the transport or journey is like, how busy the tube for your journey. And so it’s just helping that whole process from home to the back to the workplace and doing that in a safe and secure way. So I wouldn’t say there’s one thing, but as many things. And then on top of that, we’ve got three occupiers now, who wants to build on our platform, and build on their own services. And that’s when you add on for them the desk booking, meeting room booking, utilisation studies, voice activated control, follow me printing. And so with a couple of occupies KKR, Hanover square and Glencore, they’re taken aboard the app. And we’ve got one more that we’re in negotiation with this week that we can’t quite announce because we’re not quite there. But we’re really excited by that possibility. So there’s a lot to come.

And then the key thing, the other feature that we didn’t anticipate, but we have worked out that we should provide is to white label the app. So KKR for example, started off on the journey that they had a workplace experience up in New York that they thought they could use, they weren’t as advanced as Smart Spaces, they couldn’t get close to what Smart Spaces could provide. And so it has gone in reverse. And that’s an important point about being open minded to that possibility because when an occupier is in a multi-city location, they may just want their company branded app and that’s fine by us. As long as staff are happy, and they’re coming into our buildings, that’s great. And it’s good for them too.

Louisa

I’m sure it’s also a way of reassuring your clients, it’s a way of them getting back to work, getting back to the buildings in a safe environment and far more controlled and measured. Now Dan, given Smart Space is growing rapidly, I think you mentioned you are expanding to the US, who are your clients? And how do they vary across the business?

Dan

There’s actually I think, and definitely since COVID, the adoption of this technology has increased. So the client that we didn’t have pre COVID was Canary Wharf group. So they come to us, and we’re looking to roll out a contact the century solution. And it was based on our work we’ve done at 160 Old Street with GPE, they thought that would be the ideal solution to fit their building which is great as it’s a building of scale. So it was already incredibly busy during lockdown, just because of the nature of how big the estate is, and how many buildings they wanted to integrate, I was quite pleased that we managed to do that remotely. That in turn introduced us to the US to Brookfield, where we’re working for a project with them there. And what’s interesting about different clients, we have a lot of clients, really pleased with how things have grown. Some are incredibly hands on like James, which is amazing, some of just really happy just to have an app and then they their building management team run with it, but they don’t really have influence so much about what features are coming into the app.

And then others have quite big internal software development team, so they have a lot of custom integrations. I think the best thing is what James touched on, which is the fact that we’re now starting to do a lot more work for the occupier and I think there was a lot of second guessing with this in the early stages and we’re so delighted that James and his team took the risk of us because we were trying to second guess what the occupier really wanted. We’d formulated this product thinking this is brilliant, this is what the occupier needs. It wasn’t until we started to get this uptake and then subsequently, further proof that they weren’t actually fully integrated into their own space that we’re delighted that we’ve dreamt up a product developed it, and now we’ve got a demand for it not only at the landlord side, but the occupier side. So I’d say around new business that we’re growing in the UK is very much leaning towards the occupier side. And that’s more of those desk booking things. So a lot of people are looking at the activity based workplace, so they’re trying to optimize the existing space and get more people into the same space, which means you have to hot desk, you have to provide desk booking. But all this can sit on the same platform. So it’s taking the plug and play fit out that’s happening with the flex space, and taking a similar approach to technology.

Louisa

And what are you seeing over in the US in terms of clients, is there a target you have over there or is it similar to the growth pattern that you’ve seen in the UK?

Dan

I would say the businesses interested is us in the States are actually looking to operate flex, they’re looking to introduce flex in their portfolio. And so a lot of the software there is how we can connect the landlord services just like we have James in these buildings, so your access control, lighting control, HVAC, to your ways of running the space and then that goes beyond desk booking and meeting booking and looking at billing, so not going to collect rent payments but having payments available within the app. So definitely that’s where we see big change in the US at the moment.

Louisa

I mean, it’s interesting comparing the different markets when it comes down to innovation and uptake and technology. James, would love to hear from you, how would a GPE measure success? You can also maybe go into your biggest achievement with Smart.

James

I think success to us is a satisfied occupier. That’s ultimately why we’re doing this. I can’t say that we’ve achieved it yet, I’m not saying we’ve got unhappy occupiers, but I mean, we’re still at baby steps. And this is a key, just one of those key PropTech lessons. As I said, Dan and I have been working with each other for four years and we’re only really developing these products now. And it because it does take time for us to develop the buildings to put them in. But it’s going to take even more time, what we continued to do over the next three to four years, we will learn even more. And it may be that what our guess that occupiers wanted, they weren’t that bothered about this, we don’t think that’s right. The hunch is that they will get it and they will appreciate it. And what we learn and how we shape our product is there and we can close that feedback loop. I mean, I think our biggest achievement to Date is just finished. So we did I during lockdown, we completed the building called The Hickman.

So The Hickman is in Whitechapel and it is definitely our smartest building to date. We bought it with the thought that we would make it as innovative and open as we could. It doesn’t have a reception for example. It is a totally new arrival experience for an office building. It is focus around sustainability, well-being and all of the things I was mentioning. Now 20% of our portfolio is flex space that we either directly operate or we’re operating with a partner, so that part’s the building is that built in, we’ve just signed an occupier to the top floor called Four Communications, they’ve moved from another part of the portfolio. And the really exciting part of that is that, that they’re open and willing to share the learning experience. So where I’m really excited is that we’re combining the help that Dan’s giving us, where you’re building on the model that we already had, so we’re building a digital twin and what we can really start to do is develop the machine learning because the next thing, sustainability is a massive focus for us. We’ve had some major announcements this year in that field, but the key to this is how can we engage with the occupiers so that they can also take part in that journey, that they can understand how they’re consuming energy, and help us work together to reduce that consumption. And that’s, that’s the really, really exciting possibility. And I hope, when talking to you in a year or two’s time that’s where we’re at. And we’re really learning and plonking this learning into our development pipeline as well, because then we’ve got the possibilities about machine learning. And using all this data that we’re starting to get to, to really, really optimize this building. So that’s the excitement coming forward.

Louisa

I guess finally making use of all the data you have. James, it’s great to see the Estates pushing forward and becoming far more innovative, which you are the driving force behind it. The question which is often asked is what how can you make a business innovate and they what really pushes that forward? When I go into the pitch about trying to get businesses to hire a Head of Innovation or Transformation Manager, it’s very much comes down to getting sign off from senior management. Is the CEO, is he fully on board with it, and willing to invest a hell of a lot of money because it’s not cheap is it! The senior management at GPE must be completely on board with this a digitalisation strategy?

James

Yes we are. We started this conversation as I said, back in 2016, around the same time when I could see this disruption coming at us, and that discussion I had started this role, and I could see the things that were coming towards us that were going to cause us some pain. And if we didn’t innovate them, then we die right? So it was that point of where slowly we should embrace it. And our values are that we embrace the opportunity. And this is in our DNA, it is 100% of the business. So yes, it’s supported by senior management, the culture of innovation, they are excited by it, we are all excited by.

And the great thing is this year is I realized that in order to implement innovation throughout the business, is that we asked respondents fears and we asked what we call innovation champions, through each different part of business who’ve got an interest in this, and we’ve got twenty-eight. So that’s about a quarter of our workforce are interested in this in some way. And it’s using them to input into the test cases and use cases. And it means that when we found some new innovation or new companies from our investment in pilots, for example, that we I hadn’t even considered that we would implement at the beginning of the year, we have met them, and started to test it and tried it as we’ve gone forward. So the snowball is rolling down the hill and is really gathering momentum.

Louisa

And you mentioned the culture of the business of integrating technology. Have you found getting the wider business to adopt and onboard with it, has there been any challenges with that? I mean, there’s a stereotype of real estate being fairly traditional but Estates particularly being slightly more archaic, and forgive me for saying that, but have you found any challenges there? How have you thought about that?

James

Well the there’s two ways to go about it. I mean, the first thing is that alone, it’s a piece of marketing, and there is a Duke of Portland somewhere, but it’s not a land of the state. So it’s actually a very, relatively young company. And so it is perhaps more open minded than our brand would suggest, but equally the what I learned was smarting small, starting the trials, very small scale, not being afraid to learn, being afraid to fail, and learning from the mistakes and that’s exactly what we did with Dan and we learned early on, I’m sure Dan learned stuff from us. And it was a two-way relationship, and we don’t we like to say that we don’t have a monopoly on a good idea. And it’s that dialogue and just discussion that really promotes the product and it’s being afraid to fail but the consequences aren’t that big. And most people in real estate don’t have brilliant imaginations. Some of the conversations when I’m talking about some concepts, digitalisation, I get a few baffled looks by because it’s new to people, they don’t understand it. But you have to learn to frame it and you have to show an example of what’s the problem you’re trying to solve, what does it look like, and as soon as people see it then they actually want to embrace it. And that was absolutely the case with Sesame. It was May 2018 that we demonstrated this at 160 Old Street and I remember we did it. And at that moment, with the biome it was massive, and everybody wanted it immediately. And you have to show it really.

Louisa

And quick question, where did the name sesame come from? Is there a story behind that?

James

It was just it was the automatic opening, so it’s “Open Sesame”. So you can literally walk up to a door and say Open Sesame and your Bluetooth would let you in.

Louisa

Ah I like that. What was it like for you transitioning from software development to becoming a founder of a property technology company? So I’m sure you’ve been on board with the digitalisation of the industry, have you had many obstacles pitching your product as well? Not everyone sees it sees the future probably quite like you do.

Dan

I wish I could see the future better. It’s funny, when the term PropTech came around, I was like, “Wow, I’ve been doing this PropTech for a long time, and the terms only just come up now”. And there are a few veterans in the industry like me, and I think when we started the company, it was me and my brother Tom started the business he’s a fellow software developer, I could be quite envious sometimes because I was wearing a few hats doing the sales, doing some of the accounts and some of the more boring things around running business, and the best thing to happen is, and this is that transition to smart spaces is, when you can focus your entire company on a single product, you can make it the best product in the market. And what that’s d