In this episode, we talked with Stefan Schwab, CEO of Enlighted. Enlighted is a leading, human-centered prop-tech provider of IoT solutions for space optimization, building management, business productivity, and sustainability.
In this talk, we discussed the two megatrends that are reshaping the office today, the need for a hybrid workforce and the drive for sustainable building operations. We also talked about the long tail of use cases that leverage sensor data to improve employee productivity, track assets, and improve visibility into operations.
- How do you balance the stakeholders' priorities with business sustainability?
- What are the focus areas in portfolio development for analytics tools?
- How would you help the company to entice employees to return to the office?
- What is the future of the workplace that excites you the most?
Erik: Stefan, thank you for joining us today.
Stefan: Thank you for having me, Erik.
Erik: Yeah, it's funny. We were just working with a company that distributes IoT devices for a number of different industries. They were asking for support looking into new industries, and Enlighted is one of the first vendors that popped up on their priority list. I was just reading in depth through your company yesterday. Then I remember that, on my calendar, I had this conversation. So, really looking forward to learning a bit more from the CEO here, Stefan.
Stefan: Yeah, thanks. That's actually great to hear that we are on top of mind of many people. I think also what we provide is actually spot on at the moment. I'm really excited to be here to talk about IoT, how IoT can help and drive sustainability. It's an amazing topic on everybody's mind. I'm looking forward to our conversation, Erik.
Erik: Well, as you said, it's really a timely topic. So, maybe we can start there. But before we jump into that, I'd love to understand a little bit more of your background. It looks like you're old Siemens. Is it true, back in 2006, that Siemens was basically a first ending point after graduating from university?
Stefan: Yeah, that is correct, actually. I joined the almost oldest startup, which is now 175 years, Siemens — it just turned 175 years last year — after I graduated from university. Since then, I got amazing opportunities inside Siemens starting in Germany. As you can hear maybe from my accent, I'm originally from Bavaria. Then I moved on different roles in Germany, but I then got the opportunity to work in Asia and Singapore for a bit. But then I moved on to Melbourne in Australia, which was an amazing experience culturally but also personally for my family and myself.
Then since 2018, I'm here in the US, Silicon Valley. This is also an amazing opportunity, a fast-changing environment, the ecosystem here and everything. I get up every morning and have the opportunity to learn everyday something new, which makes this so exciting. And so, even if I'm a long-term Siemens' employee, I think it's not like that. It doesn't feel like I'm just with one company. It actually really feels like I got so many different opportunities, where maybe in another arena, you would have to change companies. Here, I got this opportunity with one employer, which is Siemens. For me, personally, and also my family, it was an amazing journey so far.
Erik: Well, that's a good way to put it. The world's oldest startup, right? We do a lot of work. I'm based here in Shanghai, China. But we do a lot of work with Siemens' strategy and market intelligence and so forth. But you could always see that they're thinking what's next on the horizon, and how do we evolve the business. If you don't evolve, you don't last to be a 200-year-old company, right?
Stefan: Yeah, exactly.
Erik: How did you then end up at Enlighted? I saw that. I think Siemens acquired the company in 2018. It sounds there that you're the first CEO. What was the process of you landing in this position?
Stefan: As I said before, I got these different choices. Every four or five years, what is next in my career? Then again, after almost four years in Australia, there was still the decision to make for, first of all, personally, do we go back to Germany, or is there anything else where I can add value to customers, to the company? Also, then what is interesting personally for me? Then the opportunity came up. Because Siemens, during that time, actually, had three acquisitions at the same time. I got in touch then by Siemens' executives in Germany, with the US organization. We spoke about, "Hey, there's potential with a new arena we want to tap into, which is IoT and subscription-based business for the building market. We actually see there's a lot of disruption on the horizon. We want to prepare ourselves. Actually, Stefan, would you be interested in actually looking into that, and maybe even lead that?"
It's a little bit different to what I did really in the past, where I was really at the core business of Siemens' building technologies business — mainly focusing on HVAC systems, fire system, access control system, intrusion systems, and so on. But I was excited about it because, I would say, in the last year I was in Australia, I started to engage with a lot of startups in Australia. This was exciting to me, because I already could see that there is a potential for disruption. It doesn't mean that every startup is going to disrupt the industry and incumbents. But there's a lot of potential there with their ideas. Most of the startups in Australia also went on to North America, because the market is bigger to explore this market there. This is how I got a little bit in touch with startups. Then Siemens offered me this opportunity, besides going back to Germany and then I spoke with the family. They said yeah, excited.
I didn't know a lot about Silicon Valley. I didn't know a lot about the VC world here. I was so on San Francisco. In the end, we ended up far south from San Francisco, close to San Jose here in the valley. But again, I love it. As I said before, I also say I learn every day something new, which is amazing. So, it's not boring at all. It's really exciting. This is how I ended up here then in 2018. I'm looking even forward to the next couple of years. Because it's a lot of fun. It's challenging, but it's a lot of fun.
Erik: Well, as you alluded too, this is just, from a timing perspective, really an incredible time to be in this type of business. Maybe we can get into what the business of Enlighted does. You're covering some of the big topics that are shaking the world broadly right now — topics related to how do people live in spaces as the workforce evolves, and then also topics related to sustainability, and how do we — I think a lot of people don't realize how energy consumptive buildings are. Maybe we look at agriculture. We look at cars. Those are a little bit easier to understand. But certainly, that's a mega trend right now. When you look at your business, what are the big value proposition levers? What are the big trends that you're focused on right now?
Stefan: The big value proposition that we focus on is sustainability — sustainability and energy reduction, CO2 reduction via IoT, and focusing on the users, focusing on people. People are in the center of what we do. If it's with our IoT devices or if it is with workplace experience, applications that we provide, this is where we focus on. Because we collect a lot of data, a lot of relevant data. You just said it before. Buildings contribute more than 40% overall to the energy consumption in the world. The building itself, it's humans and it's technology then who also consume a lot of energy, for sure. We focus on actually where they come together, where people come together with the building, where they work, or where they live. This is our value proposition.
Again, this is spot on. These topics are spot on. When I think about sustainability or CO2 reduction, it's a major topic these days. On the other side, when we think about hybrid, flexible work, it's a major topic. These are the things we are addressing with our technology. Again, as I just said, again, what is important for us, we put the human in the center. Because only when you have humans on board, you can solve these massive problems, what we just spoke about.
Erik: Well, maybe we can then get into the stakeholders here. Because when you say sustainability, I'm imagining that in the lifecycle of the company, that was not the first focus. Back in 2009, some people were concerned about sustainability. But it was more of a niche topic. Today it has become one of the key topics. I imagine there was an evolution there. Then as you said, the human has to be at the center. Even if sustainability is a very significant corporate concern, and it might be a personal concern for a lot of employees, it's not something that day to day you go into the office and you think, okay, what you realize, you recognize your life quality in the office. You don't necessarily recognize your carbon output and so forth.
I guess you need to balance these different priorities between the actual users of the facilities, maybe the businesses that are renting the offices or the facility, and then the business, the building owner or the facility owner in the end. So, how do you look at the stakeholders that you're involved with and then balance their different priorities when it comes to what you're actually delivering?
Stefan: I can tell you one thing. You mentioned it just before. It got far more complex because the stakeholders and also the level of impact the different stakeholders are making these days increased heavily. For me, personally, when I look at the business, it increased heavily during the last two and a half years due to the global pandemic and how we started then to use buildings again, and how we also started to implement hybrid or flexible work. There's actually a huge challenge. Because you have to have more people who give input on what systems and what solutions need to be deployed. It's not that only. As you said as well, it's not only the sustainability topic. On the other side, employees, they also care about their well-being. What has the office to offer, for me to actually make the journey to the office? Because it's different compared to three years ago when it was a daily habit. When you went to the office today, it's a different story.
When do you go to the office? We call it activity-based working. That's when you come to the office, when it makes sense that you go there to collaborate or do a certain kind of work. It does maybe not make sense — I'll give you an example — when you just do one-on-one calls, Zoom calls, the whole day. There, it does not make sense to come to the office. So, that's the one part. On the other side, all the big boards or the big companies have now sustainability on top of their agenda. It's about reducing energy consumption, getting greener, meeting their carbon zero targets, and so on. I want to link it a little bit to the beginning of the company, which goes back to 2012, with the first customers the company had in mind when they looked at all these big, high-rise buildings or enterprises where the lights were burning all day, all night long without the floor being used. Then the idea of the founders was, "Hey, something needs to be done there." First of all, there is a problem to solve. Secondly, there's also something to do for the environment, because this cannot be sustainable if the lights are on all night long. So, they started actually linking the first idea, the sensors, to reducing the energy consumptions of the lights.
With the first and second installation, what they figured out is actually with how they develop and architected the sensor is that they collect far more data which goes beyond the energy consumption. It goes into, okay, when are people walking in? How are they using the space? Are they gathering in this part of the building? Are they gathering somewhere else? Then this idea developed even further. What else can you do with this data? You can link this data to all other systems the building is using and help also the other system to reduce the energy consumption. Because now you know, actually, where are people, how long are they in for, which areas of the building they prefer to work in. All this kind of use cases developed further and further.
Then in 2020, when COVID hit, even more use cases actually developed. I think our business, when COVID started, mainly here in North America, the customer who had our system in place approached us and said, "Look, you have all the data. Maybe you can help me to do social distancing in the office." Remember the days where it was six feet or one and a half meters in Europe, in the metric system, where you had to keep distance and companies needed to comply with this. They came back to us and said, "Hey, can you help with your system, with your platform, actually, to guide our employees or to guide our enterprise through this time?" Actually, we could. We developed quickly a new product which we called, during the time, SAFE so that people really could accommodate social distancing. This ties back to the evolution, what you mentioned before, the evolution of the company. Then I look ahead. I see the same thing happening again. Because there will be more and more iterations of what we're doing today when I think about what other use cases that are coming our way.
Stefan: That's really fascinating to understand actually, that sustainability was at the core of the company from day one. Then it really evolved into understanding how can these data points be used to also solve other problems. I'm a little bit surprised. At least, it's interesting to understand that the same hardware that's being used to manage the energy management systems, the lighting control systems, can also support these other use cases. For some reason, I was imagining them being quite distinct products. You choose A or B. Then you, maybe, at a higher level, you can integrate them. But it sounds like you're finding ways to use the same technology to solve multiple problems.
What does that look like from a portfolio perspective then as you're bringing new things to market? Is the focus on — I guess there's a balance here. But around what new sensors we need to put in to collect new data. But it sounds like it might be less that more what new analytics tools we can build to make better use of the data or to visualize it for different user groups, for different use cases. When you think about the priorities for you, from a portfolio development, where are the big focus areas?
Stefan: First of all, the sensor, as you mentioned before, has a lot of capabilities. That's the beauty. Because more capabilities in the sensor enable also my use cases later on. How do we do that? For example, when I talk about social distancing, this we do with Bluetooth radio. Bluetooth is the technology. We're using the sensors to Bluetooth radios. One wants to send and one to receive. This actually opens up a lot of additional use cases, which we have not in mind originally.
When I look what do we do from a technology point of view, the sensor also evolves regularly. But the sensor itself and the technology doesn't evolve as fast as on the other side, the use cases with previous the data. Also, where do we fit in this data to create even more value for our customers? This is evolving much, much faster. Also, the demand from customers are evolving much faster that they say, "Can you help me to make sense out of this data?" Because just providing the data doesn't really help the customer to drive more outcomes for them. What you need to do is actually to enable the customer or to support also our customers in, okay, what now does this actually mean when you look at that set of data? And how can you link it to help me to achieve my goals, which in the end could be being in the office or preparing the office for a big day because people are coming in on the other side? But also, can you help me to reduce more energy if it's actually needed?
I can give you one specific example. The heatwave in California in September, last year. We had one of our big technology customers, downtown San Francisco reaching out to us and saying, "Look, we ordered all employees into our office because we don't want them to stay at home and use the air conditioning at home and have a big load on the grid. We actually want to help the California grid in the Bay Area, the grid to be relaxed a little bit." Because employees are not using at home the air conditioning; they use it in the office. "But now we want to do even more. Can you actually reduce the energy consumption, our lights, to a certain extent but not make any compromise on the well-being for the employees, that it's still bright enough so they can do work?"
By doing that, we help this specific customer to save the energy which normally 128 Californian homes consume in one year. This was just for one afternoon. These are the things where you can see how you make an impact with the system. I always see this flexibility in the system, what it actually can do when it needs to perform, how quickly you can act and respond to events like that. That's actually the impact that's great for us. As a company, we can see it. But it's also great for our customers.
Erik: That's an interesting use case. Let's see. You have quite a large class of use cases: center space intelligence, sustainability solutions, workplace solutions. What I'm thinking about then is the ability to extract insights from across your — also your portfolio of customers. Of course, building by building, you can help them to optimize their existing environment. But I imagine also extracting insights from across your portfolio of customers so that you can say, well, what if you reconfigured your operating environment? You might be able to have outsized benefits and also still meet the needs of employees, maybe even improve the employee workplace in ways that maybe a building manager is not even thinking about. Because I think people tend to think about incremental improvements, incremental changes in the existing environment as opposed to thinking what are different configurations that might be possible.
I imagine your sensors are looking at so many different configurations across so many different customers. You probably have the ability to understand what are more optimal situations where they're less from a higher perspective. Is that insight that you're able to bring in today? Are you looking at how to leverage that larger data pool across your portfolio of customers? I guess there's also some privacy or data management issues there, which are a bit more technical but also have to be addressed.
Stefan: Yeah, we cannot share data across customers, because data is customers' — we honor the data privacy of our customers, so we don't share that. What we can say is that we have seen, for example, with other customers that they do A, B and C, and then they can make a reference to a specific customer. A lot of our customer have a large portfolio of buildings around the world. Actually, this already is sufficient to point out how, for example, buildings operate in this part of the world compared to this part of the world. Or even when you look at North America, very big. You can say how buildings operate in the middle of the country compared to the West Coast and the East Coast. So, you can make already a lot of comparisons there and help the customer and guide the customer to achieve whatever their target is if it's, again, sustainability, well-being, linking it to other systems.
But you raised a very good point before. This is the topic of looking at things holistically and not in a silo. Because what we see a lot of times today when we think about smart buildings, that the systems are locked in a siloed way and not in a holistic way, what other systems you have in the building. Because when you do that, we have the opportunity on how we go to market and how we interact with our customers. This makes then a real difference and, in my opinion, makes them a real smart building. But there are not many out there. Because, just as I said before, I see too many approaches which are siloed when it comes to how data is exchanged to make most use out of the data, what different systems gather.
But we get there now. Again, we are there sometimes on the forefront. Sometimes we provide data to other systems, which they then have the overarching look at the different subsystems in a building. This is getting better and better. That's actually then also the beauty of IoT, when these different systems which provide data talk to each other and make use of the data. Again, it comes to whatever use case or whatever pain point the customers have, wants to address.
Erik: So, this topic of looking at the building holistically, I think, is quite interesting. It would be great to hear maybe a couple case studies — if you can share company names, great. If you want to anonymize them, that's fine — to understand maybe one from a brownfield situation where you have an existing 20-year-old building, and they're trying to figure out what can we do on the existing footprint. Then I guess, in a greenfield situation where you're building from scratch, you might have a lot more potential to look at. Okay. What an opportunity to really optimize this building since we can make all the infrastructure decisions together with our vendors?
Are there a couple cases that come to mind in those two examples? It'd be really interesting to understand the thought process of what are we trying to accomplish, and then how do we implement it. Where are the limits? Where do we say, okay, the cost benefit is going to start to hit up against some limits here?
Stefan: Yeah, let's see. So, you said brownfield and greenfield. Let's start with brownfield. Brownfield, one example is in France. There's a company called GEODIS. It's a big logistics company. They also have a footprint in North America, or they have a footprint around the world. We started with them in France. It started — always, the entry point is always, when we talk with about our sensors, it's about reducing the energy consumption and making the building smarter via lighting control. This is always the entry point when we have a discussion.
When we started with this discussion, then we go beyond. Okay. What else are the pain points you're having? In that instance, with GEODIS, it's about asset location. So, this means that we can help them in their warehouses to find certain assets. Again, this happens via Bluetooth communication between sensors and whatever asset they're trying to find. This asset could be something they store in the warehouse. This asset could be that this is a cherry picker they're looking for, and so on, and so on. This is a very strong use case we see more and more in manufacturing and logistics. But again, the starting point is energy consumption, sustainability, making the lighting smarter. But then it always goes further, further, especially with the companies which think ahead already, a couple of years ahead. Then you always have this discussion. This implementation in brownfield, what is normally nice as well, you can see the impact faster compared to greenfield because it's always longer cycles until you have a greenfield building up.
On the greenfield side, here on the East Coast, in the United States, we have a big entertainment company which we also started again with the lighting control even in the greenfield part. But then, also, this company said, "Hey, we have more and more use cases. Can you actually, with your technology, address also these use cases?" Then with this company, with this entertainment company in the East Coast, it went into space utilization. "Can you help me to later understand how our employees are using the space? Then maybe we can reconfigure the space. Also, can you help me to find also certain assets in this building? Or maybe even with your technology, can you help me — because we get a lot of visitors who want to see this building, can you help me to guide these visitors through the building?" Or actually, can we also restrict the visitors to get into certain areas of the building? Yes, we can. That's, again, the beauty of this IoT technology, that you can expand into these different use cases you debate with the customers.
Yes, there are limits. You mentioned the return on investment. Yes, return on investment or return on invest is also always on the forefront of the customers, especially when it comes to — they want to have a payback in a certain period of time. Then you have to see, does this use case makes sense? Does this use case address that? But sometimes it's really about a smart building. Then in this instance of the entertainment company, it was about a smart building. It was really not about the return on invest. We also see that more of the return on invest, this customer on to brownfield approach compared to the greenfield approach, actually.
When you think about that in a building, 80% of the costs are related to operating the building in the lifecycle part, only 20% are upfront and about the infrastructure, what you put in the building, we always tend, as society or as businesses, to make adjustments at the 20% because we don't worry about the 80%. But the real cost will come up in the 80%. If you would invest more upfront in proper technology, you could save so much money in energy on this 80% later. This is amazing.
Again, discussions more and more when we talk about that. This is actually factual data. This is data available everywhere, that you have this 20% and 80% — 20% upfront, 80% later. But when you get a chance to address this with a customer, there is actually no ROI discussion necessary anymore because you can really show the benefit of systems like ours, what they actually can do later on in the lifecycle, besides that this is a smart building. Like I said before, guiding visitors, also restricting access for visitors in a building. Because something is confidential, but it shouldn't go, and so on and so on.
Erik: Yeah, that's interesting. I didn't know that. I knew that there were very big carbon implications in operations, but I didn't know that 80-20 rule. It's also interesting, this long tail that you mentioned. It sounds like there's a handful of use cases that pay the bills, let's say. Energy consumption management, those are what the ROI is going to be calculated around. Then it sounds like there's this long tail of use cases where somebody says, "I've got a specific problem that's a bit unique to my business. If you can help me solve it, it has a lot of maybe intangible value. It has strategic value. It has value for how we impress our customers, or how we delight our employees, or how we basically accomplish some goal."
You're working across a number of different areas, of course. I guess every business uses buildings, right? Maybe we can quickly touch on what are the big areas? Commercial real estate, healthcare, you mentioned already warehousing, manufacturing. I would imagine universities. If you look at the top industries for you, maybe historically and also going forward — I don't know if that might differ in the next five years — what are the markets that you're really focused on?
Stefan: The markets we're focusing on is companies or verticals which really try out also technology. Because what I also have to say, when I think back 2012 — I joined the company in 2018 — and then we added the workplace experience part actually to the company in 2018, which was originally a separate Siemens acquisition. We combined these two companies for many, many reasons. What I figured out, with both companies actually, we went into a market which was not completely defined. We were really early on in these markets. When you're early on in these markets, I have to say, in hindsight, when I look at all the data I see for our company, it's important to be around tech companies. Because tech companies also tend to try out new things. They don't ask you all the time where else have you deployed it. So, they are actually the ones who help you to be the first one to deploy it. Then you can say to other companies, "Hey, we have it deployed there. We have it deployed here. So, it's not like that you're a guinea pig." That's actually very important.
We started, really, in this tech world, in the Silicon Valley area where companies were willing to go in with us and try out new things in the market, which we just also, ourselves with some others, starting to develop. Actually, like a new category in the market. When I think about workplace experience or hybrid work solutions, it's a complete, new category in the integrated workplace management market. But going further then, so you mentioned healthcare. You mentioned also or I mentioned as well manufacturing and logistics. You can actually see that buildings are operated almost similar in every kind of vertical. The lights are on all the time. They have use cases in healthcare, like logistics use cases where it's important to locate assets. We call it location intelligence. You have also challenges in the healthcare market. How is the space used? Because one of the other use cases that our customers want to look at data, can they actually get rid of some space because it's underutilized? A lot of times what we heard, especially pre- pandemic is, "Oh, we need to build new phone booths. We need to build more meeting rooms. Because never when we use a meeting room, there's a meeting room available."
The nice thing with our system is we can actually show with data that it's not the case. Before that, it was just anecdotal, or it was just somebody was shouting something. But now with the system, you can actually prove if you need more meeting rooms or if you need more phone booths, or actually if you need less because you already have enough. There's just maybe once a week the time where everybody's looking for the same room. Maybe you also have two people sitting in a meeting room which is supposed to hold 10 people, and so on. So, you can make these adjustments.
Coming back to the industry. We figured out that these problems exist across different verticals. What doesn't exist across different verticals, in my opinion or what we see, is actually the endless use cases. That's the reason why we picked the ones — manufacturing, logistics, healthcare. There, you see a lot of pain points we can solve or most of the pain points we can solve, I would say. The other areas, when I think about a data center, you have an almost — it's about the energy consumption. It's about the status and the needs to run. There cannot be an outage in this data center. These are the main use cases there. That's it.
But then, again, in the other verticals, we see actually — I sometimes say endless use cases. I think so. Because every week, there's a new use case I haven't thought about. The customer asks us, "Hey, can you do that?" Or, "Can you help us with that?" That's the amazing part of these industries and these verticals we are in.
Erik: Very interesting. When it comes to then this ideation around new use cases and unique problems that companies have, as a technologist, what's your view on low-code platform, allowing the customer to hack things together with a toolkit versus them coming to you with a problem to solve, and you taking more of a consultative approach? I mean, there's tradeoffs there. But where do you land on this topic?
Stefan: Very interesting point. Siemens also made an acquisition with Mendix in the local arena almost at the same time they acquired us. We actually collaborate with them. They are based in Rotterdam. But they have a big office here also in the US. Sometimes, actually, we go together hand in hand to solve customer problems. When it comes to low code, I believe there's a place for low code which is a little bit different for our place. Because when I talk about user centricity, today we get more and more with our business into consumer-based business. So, our customer is the end user. The end user, because of private experience with Amazon, for example, has a certain requirement when it comes to applications, what they want to use here mainly when I talk about workplace experience. I believe, with low code, you don't get to this level of experience consumers are expecting these days. So, then they come back to us. User interface, user experience is very important.
I don't believe that low code is the best answer to this part. But then, the other parts in the industry where low code is a really good answer for certain use cases, it's actually quick. It's good and, yeah, perfect. But a lot of times, I don't see us competing with local platforms in the market. I actually see us partnering because we address different problems for a different buyer persona. Also, our end customer is not always IT. Local platforms normally go to IT and help them to solve problems. When I think about our customers, it's a lot of times the executive suite. Because we address problems with what executives have on their mind. These days, for example, how can I bring back — I said it at the beginning as well — how can I bring back employees to the office? Can you actually help me, with your application there, to make it as easy as possible for employees to come back to the office and decide what is a good day, what is a good activity to be in the office, things like that.
Erik: Okay. Interesting. Maybe we can stay on that one for a sec because that's a very human problem. How do you, as a company that basically has access to data and analytics, how would you approach that problem of helping a company to entice employees to return to the office?
Stefan: What we figured out with our research, extensive research, is employees come to the office or people come to the office because of other people. They don't come to the office because there's free pizza or there's a free donut. They want to collaborate with people, and they want to make sure that when they come, that the people they want to collaborate with in the office are in the office as well. This is how we help our customers these days. We take away from employees this cognitive load to figure out with different platforms, and reach out to other employees when they need to come to the office. So, we tried to take this barrier away and make it as simple as possible for companies who want to address hybrid work.
Because we also have a lot of customers now which actually make it mandatory. Just two days ago, Disney announced publicly that employees have to come back four days a week into the office. For these companies, it's easy. They come Monday to Thursday in the office. Friday apparently is the day they don't have to come. There is no need to take away this load. For them, it's important because they have all the employees back in the office, to have a desk reservation, a room reservation tool, which we provide as well. Different kinds of problem here.
The companies, which is the majority overall, when I look at our research, the big bubble in the middle is hybrid work. Hybrid work is flexible, like Siemens does as well, where we have three days in the office and two days remote. Remote doesn't mean you have to be in the office. It can be wherever you can perform your work. For these three days, which an employee can choose freely, there you need to provide a solution and make it as easy for them to come to the office and decide when to come. I think if you can realize that as a company, we provide the technology, if the company can actually give this powerful tool to the employee, then you will see more people coming into the office voluntarily without having to force them. Because also, employees don't like to be forced and told by their employer these days when to come to the office. Also, it's what our research shows us.
Then when they come to the office with our IoT technology, we can actually say, okay, what do they do in the office? Where do they go? Do they actually — when they reserve a desk, do they sit at this desk? Can we release the desk again? Then also, if maybe only 10 people come into the office and we know where they want to sit, then we only have to put air conditioning or heating — now, at the moment, it's cold in California — heating in this part of the building. They don't have to heat up the whole building. This kind of intelligence, I think this comes also back to sustainability. It can really make a huge difference in terms of what I said, where we work, we work. People and the building come together, or the space comes together. This is the sweet spot.
Erik: Okay. Fascinating. We're a relatively small company but struggling with the same issue right now. We've communicated to employees why it's important to be back at the office. But I have the same experience there. It's really about creating that critical mass of people so that you have a problem. And you can just look to your left, look to your right, and ask somebody for a quick five-minute chat, which really, hypothetically, you can do over a phone call. But it's not the same, right? To be able to poke over to a laptop and share with somebody.
Stefan, let's touch briefly on the business model. I always think one of the most exciting parts of IoT is the ability to innovate with business models. In here, you have a business where you're selling a lot of CapEx. I don't know if it's CapEx you're selling, a lot of hardware. You're selling a lot of front-end applications. You have a very powerful back-end platform with analytics. Then you also have services. So, you have all these different elements. I guess there's 1,000 different ways that you could combine those into different pricing models and business models. But what have you found to be most effective for your customers?
Stefan: For our customers, when you think about the infrastructure, still, this is a CapEx project. What we try to do at the beginning is convincing that this could all be subscription-based in the sense that it's just the means to the end, that you need it to make all these services and all these software applications possible for them. But this is really hard. Because also, it comes back to the complexity of the market because you have so many different stakeholders, and so many different people in a company who hold different budgets. So, that was hard to combine.
But what excited me also to come here because I think one of the things I wanted to achieve, or I'm going to achieve with the company on this journey is also to make this whole business more and more subscription-based. It doesn't work like that overnight — what I said before, with the switch on and switch off — because of the complexity. But over time, it will be possible. I also believe, over time, the importance of the sensor itself will go down a bit. Because again, the sensor needs to provide data, that you can build use cases on top of that. Today, already, we also ingest other kinds of data from other sensors. We are completely open in that arena. I can see that actually really the benefit for the customer lies in the end and what you do with this data.
Yeah, you're right. In the IoT space, it's really about the business model. It's about the ecosystem, with whom can you partner and who can help you actually to get more and more of the infrastructure into the market, to provide these use cases for your customers or for the increasing customer base in the end. That's the interesting part.
What I really personally have to say underestimated is or I overestimated is that this can happen faster. I think there's still — because in the building industry, in my opinion, it's a very traditional industry. The change is really happening not as fast as in other industries. The adaption is not as fast. Because also, there are not so many disruptors out there, that you have this fast change there for the building industry, that it took longer or it takes longer than I originally expected it will take that we can change business model and make it more attractive and also make the deployment much faster than it is today.
Erik: Yeah, it's always more challenging. Because it's not just about does it work, but it's also about procurement processes and contracts and human behavior. This topic of partnership is, I think, quite interesting as well. Because I know when you look at a company like Johnson Controls for HVAC systems or Otis elevators for the elevator systems, they're also touching on some of these topics, right? What's the movement of people on elevator systems? They have a lot of data there and so forth.
When you talk about partnerships, are you primarily focused on partnering with technology companies that are helping you with different parts of the tech stack like Mendix? Or are you collaborating with companies that also have infrastructure in a building. It might have different datasets as yours? If you can combine those datasets, you can develop new insights that individually you wouldn't have access to.
Stefan: Correct, yeah. We do both, actually. Even we go beyond that. We partner, for example, with — we were originally considered as competitors who have other kinds of sensors. But in the end, this actually is also what's happening in the market. Because sometimes you go into a building, and you already have an infrastructure in place. So, there's no need then to provide more infrastructure. So, we partner with them. We partner with companies like Johnson Control as well. When the customer has a BMS, a Johnson Control BMS system in there, we feed data into the system that we can make, as I said, with one of the use cases also to link the data we gather to the HVAC system, air handling units, chillers, and so on.
Then on the other side, when we look at the go-to market, we also have partnerships with Salesforce. Then we see how can we go to market and how can we actually increase our reach as we are a smaller company. Yes, we have the big company, Siemens, behind us. But also, their selling motion is a little bit different compared to our selling motion. Their buyer for the system, Siemens is providing, is a different buyer persona on the customer side than we have.
Then sometimes it's more beneficial to us to have partners for certain markets in other areas, like again Salesforce as a software company. Sometimes it's beneficial for us to go with Siemens. A lot of times, we also go with Siemens’ competitors because Siemens' market share is not 100% out there. So, they also have a limited customer set there. We are open there, also to partner with others. Technology side, I can mention merchants here, for example, which produces a different type of sensor, camera-based sensor. We also partnered with merchants. For example, go together. They take us to a customer. We take them to a customer if it actually responds to the demands of the client.
Erik: Okay. Good. That's great. I'm glad to hear that you have the freedom to partner with the most effective partner. I think the breaking down of some of these silos is a healthy thing for the industry. I think we've covered a good bit of ground here. There might be a couple other things that you want to touch on. But one thing that I wanted to pick your brain as a last question for me is 2023. What's exciting for you in the year ahead, as we emerge from COVID and move into this new world, whatever that might look like?
Stefan: Yeah, what's really exciting for me, and this is also a personal topic for me as a person, is the topic of sustainability and reducing the energy we as society use. I think we are gaining more ground now in the discussion. Unfortunately, it's still a discussion. I want to see that implemented. What I'm a true believer in that there's enough technology, or there's already technology developed to address this big problem of climate change, and what we can do in the building space. I come back to the number I said before. Buildings make up 40% of the energy consumption around the world. So, we can do a lot there. The number of smart buildings is so small, so there's so much to do. Technology is there, and we have to get from just talking about it to really getting into implementation.
I see a shift there that implementation is now starting. Then we will really see the impact. Funny enough or not funny enough. Interesting enough, I saw a report last night about the actions taken to reduce FC, kW years ago to cover the ozone layer above the earth. Actually, now, so many years later, when they banned, now they can see the impact. I have the same hope now with IoT, smart buildings, and what we do there for sustainability using this technology, that in a decade from now, we also can see the real impact that we reduce our energy consumption.
The other piece which is really exciting for me is the topic of — we call it a lot of time future of work. Future of work, for me, means just how are we going as a society to work in companies? Is it hybrid? Is it fully remote? Is it full in the office? Again, when you do fully remote, or you do full in the office, or you do fully hybrid, you always need technology to enable that. That's also exciting for me because also the technology is there. This opens up so many opportunities for us as a company, but also for our customers to deal with this and be an attractive employer. Because as what I also mentioned before, when we spoke about these buildings and what we see in the market about our customers, what all the customers realize is that they cannot operate their buildings to attract employees anymore how they have done it 10, 15 years ago.
This goes beyond the workplace experience, the application they're using to make it as easy and as comfortable for employees to come back. It's also about how they operate the building. You said it correctly — that it's not on top of mind of every employee when they come to the office, is it now sustainable day for me in the office or not? But what we hear and see more and more, and I see that when I do interviews, the question of applicants comes up more and more, to me as an employer and also to our customers as an employer is, what do you do about sustainability? If you say so, can you show me what you do there? Not only tell me.
I think this is important. This is an exciting time, because I think we have to bring now from stopping to talk about all the things we talked about the last 5 to 10 years, that we're really going now into implementation. I'm excited about to see this impact. What I said before, what I heard now with the ozone layer, that now we can actually see the impact because we banned things 10, 15 years ago.
Erik: Yeah, I was just reading about that as well. That's promising to see that our actions can also push us in the other direction. Stefan, I'm envious here. You're really at the forefront of two mega trends right now in terms of rethinking the workplace and sustainability. So, I imagine you're going to have a fascinating decade ahead. I think we've covered a good bit of the business here. Any last thoughts that you wanted to share with us?
Stefan: Yes, I encourage really everyone to use what I just said before, to use the technology available to make this a better place. We have the opportunity. I think it's everybody's responsibility. If you're a CEO or if you're an employee, you have technology out there where you can really make an impact in terms of making this planet more sustainable, helping to reduce energy consumption. There are so many low hanging fruits as well that, for me, really, personally, it's not a heavy lift overall. There's really many low hanging fruits which we can harvest already.
We are a small player. We are a very proud player, but we are just a small player in a huge ecosystem where we play with bigger players together. Really, we have all the same intention to support our customers on their journey with sustainability, with the new way of working and so on. There's so much to do. As you just said before, it's really exciting.
But I want to mention as well, what really helps when you see the stories like the ozone layer, when you can see the impact, it really helps also to tell the people you can do something and you make an impact. Because you can see it. Now a lot of times people think, "Okay. If we do that, there's no impact. I'm just a small person. If I do something, and I switch off the light, now what's the impact there?" Yeah, but if a lot of people do that and they can see the impact, it makes a huge difference, in my opinion. That's what's so exciting. What's so exciting is that, as you said as well, we are at the core of this piece with our technology and all of these discussions, which makes it so exciting but sometimes also very challenging.
Erik: Great. Well, for the listeners, if you'd like to learn more, check out enlightedinc.com. Stefan, thanks for your time today. I really appreciate it.
Stefan: Yeah, thanks for having me, Erik. I can't believe that the time flew by so fast. It was really encouraging and really, really good to chat with you today.