What To Build: Kitty Sullivan (Investor, JLL Spark) & Andrea Jang (Head of Growth, Americas, JLL Spark)
Conversation with Kitty Sullivan, Investor at JLL Spark and Andrea Jang, Head of Growth Americas at JLL Spark. We chat about JLL’s strategic value add for startups, the importance of quantitative results of pilots, and how to effectively sell into the real estate and construction industries.
1. Tell us about yourself, where you currently work, and your path on getting there.
Kitty: I’m the Director of Investments at JLL Spark, the strategic venture fund for JLL, a global commercial real estate services firm. Prior to this, I worked in operations for an early stage startup. My current role allows me to be at the tip of the spear at disrupting an under-digitized industry via technology and so it was too good of an offer to pass up.
Andrea: I lead Growth for the Americas at JLL Spark, prior to this role, I was at JLL leading Corporate Strategy and M&A for JLL’s West Coast brokerage, property management and project management services, as well as growth and innovation initiatives for JLL’s US National Property Management business.
Jones Lang LaSalle, Inc. (“JLL”) is a leading professional services firm that specializes in real estate and investment management. JLL has six different global business lines: leasing, capital markets, property management, project / development management, corporate solutions (real estate services for Fortune 500 corporations, ie. Workplace services, occupancy planning, facilities management, lease administration), LaSalle (global institutional real estate investment manager).
2. Tell us about your role and what your mandate is and how this specifically relates to working with startups?
Kitty: JLL Spark’s broad mandate is to help shape commercial real estate’s evolution overall by investing in best of breed technologies across the real estate life cycle.
The growth team serves as the bridge between the portfolio companies and JLL’s core business. We help these startups grow and take advantage of JLL platform in 3 key ways:
a) Business development: Identifying specific channels of distribution and making introductions when appropriate, through JLL’s core business lines and JLL’s institutional (landlord) or corporate clients. For example, our internal team is an official reseller of VergeSense to our Fortune 500 clients.
b) Events and marketing: leveraging JLL’s brand and connections to provide startups priority access and speaking opportunities at top industry events.
c) Industry guidance: Help our portfolio companies to shape their sales and product development roadmaps in order to gain traction and acceptance from the real estate community.
Andrea: By bridging technology and real estate, JLL Spark’s goal is to educate the institutional real estate community about exciting technologies helping real estate professionals improve productivity and gain valuable data insights captured through technology.
3. What are some of the interesting types of projects that you’re currently doing with startups?
Kitty: We recently invested in a company called OpenSpace.ai that uses artificial intelligence to automatically create navigable, 360 degree photo representations of any physical space. This is useful for project and construction managers to measure progress and spot potential delays of a development project, cost overruns, and inefficiencies before they become problems. Our goal is to launch a national partnership with JLL as our initial pilots with corporate clients have been successful and users have been very happy with the data captured through the tool.
Andrea: Software Motor Company is another technology that we’re excited to share. It is a reliable, efficient, intelligent motor system, that combined with IoT building automation technology, results in optimal efficiency. A recent pilot at a JLL-managed Class A building in San Francisco showed a 38% decrease in energy consumption over 3 months. JLL’s engineering and project management divisions are excited to introduce this smart motor to our global corporate clients in order to redefine HVAC efficiency.
4. What number of these projects move into production? By what criteria? One of the challenges we see startups facing is how to move a customer from pilot to production.
Kitty: We will often do a pilot as part of a due diligence process, testing out several solutions to see what really works. Then, we’ll introduce solutions to our clients to see if they’re excited about it as well. Ultimately, we have to cater to our internal stakeholders and external clients.
For example, I recently reviewed a generic SaaS asset management tool. During the course of my due diligence, JLL clients who were target users of this product expressed it was a “nice to have” but were content with the status quo. This is a problem I’ve seen for many startups where their product or service isn’t a “must have” and the pain isn’t acute enough to move them into production.
It’s important to also be able to put hard numbers behind time or money saved because otherwise it’s difficult to get buy-in by selling on abstract benefits such as making tenants happier or giving them peace of mind.
Also, when the startup doesn’t yet have any big logos, even if the pilot goes well, there’s hesitation to use them because nobody wants to be the first. Real estate has historically been a conservative industry with the mindset of “if it isn’t broken, don’t fix it.”
Andrea: Effective pilots have shown quick results and user satisfaction. Last year, we deployed Jones, a certificate of insurance (COI) automation software, into two JLL-managed buildings and saw a significant increase in compliance rates, exceeding 95%, as well as a reduction of 10 man-hours/week spent to manually track, manage and log COIs for building owners and tenants. As a result, JLL property management is deploying the software through its office and retail managed portfolio, and JLL’s largest clients are exploring rollout within their entire portfolio as well.
5. What are the major challenges in your industry these days, and specifically ones that you think can be addressed by the right type of AI and or robotics application? Can you give some detailed examples?
Kitty: We’re doing a deep dive into video analytics, to improve safety and security of spaces. We’ve done a pilot internally with several different technologies to understand what efficiencies they can drive and are excited about results thus far.
There are a lot of manual tasks that can be potentially automated. For example, taking humans out of redundant tasks or tasks that can be done remotely. Drones that can clean office windows, taking humans out of harm’s way. We’ve barely scratched the surface of such tasks within construction.
On the AI side, one of the biggest challenges is delivering a project on budget on time. The majority of construction projects are grossly over-budget and delayed.
Regarding tenant experience, landlords need to up their game to retain tenants and are now looking for ways to differentiate themselves, offering services and amenities using technology to improve tenant experience. Two of our investments, HqO and Livly, enable landlords to give tenants a “remote control” for their property. This has helped our leasing teams to close deals faster by giving them more talking points and a demonstrable product experience.
Another challenge is that it’s becoming harder for the end user of all of these different siloed point solutions to coordinate all of them. Someone might have 10 disparate solutions that don’t talk to each other; they then have to track 10 different metrics for a project and they just doesn’t have the time for this on top of their actual job. What they want is a clean, streamlined dashboard that shows him everything versus him needing to go into all of the tools, dumping data into Excel spreadsheets and putting it altogether to get a holistic view of what’s going on.
6. What type of startup would you be most excited to see?
Kitty: Sustainability goals are increasingly top-of-mind for CRE stakeholders. I’d love to see more startups that make it easier and more cost-effective for building owners to leverage renewable energy to achieve those goals.
Andrea: I’d be excited to see companies trying to tackle institutional-level, commercial property management accounting systems, as well as intelligent solutions to simplify the underwriting process for capital markets professionals.
7. What should startups know about your industry before going in? What nuances or details about the industry are not so apparent from someone looking in?
Kitty: The commercial real estate industry has only recently experienced this tremendous influx of technology tools and adoption is not as fast as traditional corporate enterprise sales or direct to consumer sales. As such, it is important for startup founders and sales executives to be aware of these challenges when developing go-to-market and sales process, especially if your solution is more “invasive” — requiring installation time and process changes.
There are many startups with valuable products; however, the founder or sales teams don’t have a pathway to getting to the right stakeholders. Partnering with a strategic investor can be helpful to identify and contact the correct decision makers quickly, in order to validate the idea by doing a minimally invasive pilot, and then land and expand.
Thus far, we’ve seen two cohorts of prop-tech startups:
a) First generation: commercial real estate people solving problems they have personally experienced
b) More recently: companies founded by technologists who are outsiders to the industry. Long sales cycles impact them more because they have not yet established reliance and trust from real estate executives.
Often teams might have a commercial real estate background but maybe outsource product development because they’re not as strong on the technology side. Or they might be technologists who don’t understand the space well. I’d recommend being thoughtful in your hiring so that your team has the right balance of skillsets.
Andrea: For founders who have successfully exited direct to consumer or traditional SaaS startups, do not underestimate the value of a strong and sophisticated sales team, sales partnerships, and outward brand marketing. While it is important to have strong internal sales management and performance marketing, commercial real estate is a business which is founded on trust and rapport, and establishing meaningful relationships with senior leaders is instrumental to long term success.
8. Lastly, any recommended resources / reading (ex. Industry conferences, publications, experts to follow, etc.) for startups looking to build in your space?
CRETech is the front page of what’s going on in prop-tech on a daily basis. It covers all the bases.
Propmodo is good for long-form thoughtful articles or analyses on trends in the industry.
Conferences: CRETech, Mipim Proptech, Disrupt CRE, Unissu
Traditional CRE conferences that are covering the Proptech space: ULI, CREW, NAIOP, MBA, MIPIM
