[Music] we're gonna talk about tech and real estate today two fantastic speakers Robin chase who's also the Nichol Prize winner and Brad gray we are going to give you very brief BIOS if you want to hear more you I'm sure everyone here knows how to use tech to look up on the internet what they're more detailed BIOS might be so Robin to transportation entrepreneur she's a co-founder and former CEO of Zipcar which is the largest car sharing company in the world and try everybody knows Zipcar and also the co-founder of Ben iam which is a network company that moves terabytes of data between vehicles in the cloud and she has a recent book out peers in how people in platforms are inventing the collaborative economy and reinventing capitalism and currently Robin's passion is working with cities to maximize the transformation possible with the introduction of self-driving cars so we're going to talk about that quite a bit as I said she she won ul eyes nickels prize as an urban visionary she is one of x 100 most influential people Fast Company fast 50 innovators and Business Week top ten designers so top hundred top 50 top ten graduated from Wellesley College MIT Sloan School Management was a Loeb fellow at Harvard and received an honorary doctorate of design from the Illinois Institute of Technology Brad grey we is Brad's ok too Rylee ladies and gentlemen so so so broad Brad's not a slouch either so Brad's co-founder managing partner at fifth wall fifth walls adventure fun focused on technology for the built world backed by the largest owners and operators of real estate hospitality and retail environments throughout the world prior to fifth wall Brad was co-founder and CTO of invitation homes which is was largest owner and operator single family rental properties in the US and backed by Blackstone Brad started at UBS investment banker in real estate lodging and Leisure Group he then worked in real estate private equity Tishman Speyer and Starwood so banking background in real estate background he's from Cincinnati lives in San Francisco and graduated from Harvard with the BA in economics so the format here Robin's going to give her presentation Brad's going to give his presentation and then collectively we're all going to have a conversation about that with with the time remaining I'm going to hand it off to Robin so I thought I'm just gonna stress even though I'm working on self-driving cars coming into cities I have been doing other work and some of us talk about this other work because I think so stretch your minds and then we will move to self-driving cars and we'll have that in the Q&A so new ideas I do a lot of work thinking about the idea of sharing and so this is what the focus of this talk is today is this sharing there's this new organizational structure that is chase we build businesses the way we work and ultimately how we shape economies and that's what I'm going to talk about and there's three building blocks to this new organizational structure and that is excess capacity people and I see the word gone platforms so these three elements are what's happening and I'm calling this new organizational structure peers Inc where people in platforms are inventing the collaborative economy and reinventing capitalism if we look at this all of these companies are platforms that we've been talking about for the last 15 years all of them are leveraging excess capacity on a platform and dividing in the participation of others and I'm throwing down all these other things so if I think about the free and open source movement I think of that as a peers Inc collaboration or whatsapp and OkCupid our peers Inc collaboration when we talk about crowdsourcing and crowdfunding peers Inc collaborations an interesting piece when I think about this idea of leveraging excess capacity it is fundamentally an act of sharing because I'm saying I'm not controlling that whole asset I'm having to share part of it with someone else and my favorite example here would be bed sharing so I don't know if you guys do any bed sharing but I do a lot of bed sharing I travel a lot and I'd like to stay at friends houses and stay in their multi purposed home office bedroom and if I'm really lucky I get a double bed yeah whoo and if I'm really unlucky they told the teenager you could say from the couch rubs and use a room and I think oh my god no way in hell and that's why we had hotels hotels our bed sharing and when I did slip car I proved this telling my staff please don't call it car sharing you're gonna have to people don't like the idea of sharing imagine if we called hotels bed sharing so I went and I used one last night that some of you might have how many people put their head on that pillow before you so I went to do some research what was the largest bed sharing companies in the world and so the Intercontinental Hotel has been around for 65 years 650,000 rooms in a hundred countries and we can know that that was really hard work because the Hilton Hotels and 93 years did not build that capacity and you know what I'm gonna say next Airbnb in its fourth year had 650,000 rooms and this is where I say can you believe it I'm sure you guys are all dramatised and like an entire sector disrupted in four years like what in heck how did that happen and then couchsurfing in its ninth year had two and a half million places to stay in every country and I just have a little piece here that Airbnb recently had another round of financing and they were valued at thirty 1 billion dollars and I think there are seven years old so the question is what in heck is going on why is this happening and how can we participate so if I think about why did we invent companies and institutions and governments we invented them to do things that we as individuals can't do and I think of those as industrial strengths and so what are those things if it's gonna cost millions of dollars don't ask Robin chase I don't have millions of dollars to spend on something I have to invent a company to do that it's gonna be something that requires lots of kinds of intelligence I could be brilliant at two things it's gonna take ten things I have to bring together a bunch of people to get this thing done if it's something requires standards and standardization I am an individual I can't force a standard than anyone we have to have something much larger bigger I need to say hey this is the standard it's gonna happen this way every time and these are typically bound up in a kind of brand promised and they're often global on the flip side there's things that individuals and small and local companies do that it's much much better than what big companies do and I think of those as individual strengths and so what are those things localization and customization is specialization and if you think about the history of industrialization it has been all about ripping out this local customizing specialized to build big standardized things and get economies of scale and the prices down so big companies can do that kind of work they hate it way too expensive and so if you put these two things together in fact it is really really complementary skill sets and what has changed is now the internet exists and dealing with lots of small parts has very low transaction costs so we had this opportunity to have this brand-new collaboration that never ever could happen before in which we're getting the best of both worlds so the ink builds the platform for participation and the peers deliver the diversity of offering and if I simplify this I think that it's kind of a yin-yang where it's very complementary and symbiotic and each side is leaving enough of value on the table for the other side to participate and it's all swimming in the sea of excess capacity so I'm gonna go through these three things to elaborate a little bit on them so with excess capacity what is fantastic about it is that it's resource efficient and I'm an environmentalist and its cost efficient and I'm a business person and why I'm always looking about those costs I'm defining excess capacity something already exists it's already been paid for but there's more value there and I want you to profoundly not just think of physical objects I'm gonna try to give you examples that aren't all sorts of things but it's networks keystrokes experiences time of day not just physical objects and so think in your own lives and your industries in your own company where is there excess capacity once you identify it there's three things you can do with it number one you can slice it which is what Zipcar did instead of having you buy an entire car or rent a car for 24 hours always buying more than you actually wanted Zipcar said we're gonna let you pay just for what you want you here to pay for it by the hour and by the day you only pay for what you need or you could oops and here actually I throw this in we work is an example of that so instead of renting an entire month you know renting it for a long lease period we were founded in 2010 with 110 locations you can just pay for what you're gonna consume in terms of office space and here they are six years later a billion in revenues valued at twenty billion dollars that's like a phenomenal thing and it's this example of slicing this thing that used to have to buy big or you could aggregate and that's what Airbnb did it took a million little tiny spaces around the globe put them together on a platform where they share one insurance product and they share the way that you communicate and paste compare and contrast and that feels fundamentally different than a million bed and breakfast around the world right a totally different thing or you could open it up and say hey what new ideas do you have and I'd say that opening up of things is in fact the most exciting and powerful way that we can leverage excess capacity and my example here would be open data so McKinsey had this report 40 countries have opened up their data a million data sets and McKinsey says whoa there's three trillion dollars worth of value in there so just think this was data that the government's and the transit authorities paid for enjoyed used completely happy with it and by making these standard open api's which is the platform there's a trillion dollars with a three-term to us with a brand new value that can be extracted out of that so if I think about this harnessing excess capacity for you guys which I really should be think about I was thinking okay so this idea of slicing that's what we did with Zipcar and we were did but what about in the retail sector we're still having these big lumps that you have to buy so what would it look like to have retail space by the hour or by the day or thing about aggregating what's the air BnB of retail space so enabling owners to rent it out owners to rent out their space by the hour and by the day what would that for retail what would that look like or opening it up entirely saying okay where's my excess capacity in reception areas and basements and rooftops and open space and my excess heat can I make that available for others to harness and engage with and what new ideas might those people come up with that I would never even conceive of so think about this idea of excess capacity very seriously I think I'd say nothing else that's one that you should be taking home is a really interesting piece um this was something I've got from sidewalk labs here's what the space looks like in the daytime and here it is repurposed at night to be something totally different so how can we make flexible multi-purpose spaces and getting really extracting out all the value um if I think about the ink what is the ink delivery ink delivers platform for participation with this platform this and what is the platform do it organizes all the small parts it makes a complex transaction really simple and importantly it gets the power of the large entity to the small guys and if you're lucky you can get these economies of scale and very high-growth and my example here would be a company called blahblah car which is real ride-sharing if you want to go from Paris to Berlin in your own car you have your three empty seats they will let you sell those seats and this growth curve is very typical for platform companies they're actually founded in six it takes a long time to get your platform right you're iterating iterating iterating once you get right you had this potential for incredibly exponential growth this company now moves four million people every single month the same as ten thousands high-speed trains or ten thousand 747s yet they did not lay a track by a rail car by a plane right all harnessing excess capacity on a platform for participation inviting in the collaboration of others so what do the peers do the peers delivered this diversity of offering and it's why this business model basically beats out every other one because we've finally been able to get the value delivered of that from that diversity and so the diversity is giving us innovation and resilience and redundancy in my example here smartphones and apps if you think about the apps think about the smartphone and the operating system that is an incredibly complex thing that costs hundreds of millions of dollars whereas the apps are theoretically things that an individual could be making themselves or a small group of people and since smart phones have been invented we've seen about two million apps many of them are similar but many are not and why did we get this profusion of creativity innovation because it was individuals and their own life in their own sectors and their own life experiences to say hey with this smartphone device and these open API is what Nick could I do with that what could I imagine doing with that and it was this creativity of all of us that made this possible and the other excess capacity is that I bought my smartphone for five killer apps for fun you know 600 or $1,000 all the other apps are free writers on my investment on my purchase so it's this multiplicity of leveraging excess capacity so every single app that you have in your phone is a peers and collaboration because you're giving it your contacts you're giving it your GPS and you're giving it a free device that I didn't have to be persuaded to buy if I think about this peers Inc what is fascinating to me is it has these characteristics that are incredible and so I think of them as miraculous and before I tell you this miracles I want to make you incredibly depressed so now is the time for two minutes of depression what's the most depressing thing climate change and so I'm going to show you a chart that says globally is this year hotter or colder than the twentieth century average and if you've been born since nineteen eighty you have never experienced a than average year from a planet perspective here is 2015 here's 2016 here's 2017 and you know what you're feeling when you're walking outside right now we've already almost warned the planet by one degree centigrade and scientists are telling us that we'll be seeing plus five or six degrees by 2100 with business as usual so if you're like me you have no idea what does it feel like to worm planet by five or six degrees centigrade what in heck does that mean how could I ever understand that number so I did some research and I went and looked and said okay when it was last four-and-a-half when was last night was 4 and 1/2 degrees cooler that was the life last ice age 20,000 years ago and these are little images of skylines under glaciers and so all of North America and Europe was under a glacier and if I could reach those screens I could show you where I live in Boston and my bed is really under a kilometer and a half of ice so that's what 20,000 years and four and a half degrees looked like we are going forward that amount in 85 years so unless you have any amount inkling that maybe this is not an existential crisis as in will you exist this is an existential crisis so my friend Benny at Stanford has this nice sentence you can't solve expensive linen and that is what we have been doing and so I want to say try piers Inc and so here is the here are the miracles which I'm sure you're ready for some miracle number one because we're leveraging excess capacity we can defy the laws of physics if in 2000 I had said instead of saying I'm an invincible car I said hey I'm going to build 650,000 rooms in a hundred countries I'm doing it for years all of you experts in this room would have said Robin physically impossible you can't go the land have the arquette design it go finance it build it put in the furniture get the staff have people come do it in four years physically impossible we have been complete agreement so here's what business's usual asset building would look like over six years and here's Airbnb and why because they leverage existing excess capacity on a platform for participation and invited in the collaboration of others and this is why you get this kind of scale and so if I think about addressing climate change or any single big problem you want to talk about we have to start working with existing assets on a platform for participation miracle number two because we're building on platforms we can tap exponential learning learning is all about numbers of iterations and how many iterations do you get in your lifetime and we know that companies get more iterations so they can learn faster and if you think about platform companies that are seeing lots of transactions they can learn even faster still so my example here is gonna be learning a foreign language and the unit of measurement for that is what you can learn in a semester of college 130 hours it used to be that the rosetta stone was the number one very expensive and they would buy it because Wow in 54 hours I'm gonna be able to learn a semester of college and that was great and your boss was paying and so you would definitely buy it my new favorite companies our company called duolingo which does online free language learning when I talked to that CEO he says every single question they ask is an a/b test meaning that ask half the people one way and half the people in another way overnight 150,000 people will take that test and they will know by the next morning which is the better way to ask the question so that people learn the answer and so they have it down to 34 hours in which they can reliably teach you a semester of a language and why do I say reliably because this company is now just four years old and they have 50 million people actively every month learning languages on his platform and you say what was the excess capacity the excess capacity was how Robin chase fails on exams was thrown away for 59 years and Lewis Vanna and CEO of duolingo said Wow there's some really interesting information I can extract out of that to improve my entire my entire company miracle number three because we work with a diversity of peers the right person will appear and I don't mean Superman like Superman whatever he's strong and can fly everyone in this room is better than Superman because you had your smartphone and you can know what is the history what are who are the experts what's the weather what's the best path and my example here will be back to Airbnb in December 2012 2014 Obama said hmm I'm gonna normalize relations with Cuba six months later there are 2000 listings in Cuba you cannot do it this any other way so the thing to remember is that piercing is a collaboration it requires both of these parties we can't have exponential growth if we don't have the platform organizing and unleashing this excess capacity and the peers co-investing we can't tap exponential learning if we don't have the hundreds of thousands of crazy ways people do things and the platform doing the analysis the saying whoa best practice I'm gonna make that easy whoa worst practice oh and make it really hard you can't the right person won't appear unless you have the platform doing this crazy super computing that say hey here's the needle out of the haystack right at this minute that you want it so in conclusion if I think about the old way to extract the most value out of any resource that I want to call industrious industrial capitalism which I will define by what was the company was defined with a very strong barrier around it and what was in the company was out the company was very clear and we protected the company with patents and copyrights and trademarks and certifications and that we used to be the way you'd extract the most value out of things but today the internet exists this new organizational structure is possible and we've entered the collaborative economy where who owns this asset is this work time or personal time is this commercial use or residential use are these assets employees owned by whom and used by whom it's all this big slippery fuzzy and so I'm gonna leave you with four principles four points that for me are true and if you agree that these are true then you to believe that we have left the age of industrial capitalism and are moving to the collaborative economy so number one shared networked assets deliver more value than closed proprietary ones and we know what happens two ways one the asset is used more efficiently and the second is brand-new value is extracted so shared network assets deliver more value you guys are really smart and we've always known that there's more smart people outside of this room statistically because the internet exists I can find them so more networked Minds or creative more whatever you want then the people inside this room inside your company inside your city inside your state inside your country it is just the facts it is true there are more smart of people outside so more networked minds are better than fewer proprietary minds if I think about the benefits and opportunities of shared open assets they are larger than the problems associated with that if I think about when I was building Zipcar the people who did not invest with a Robin people are gonna scratch the cars and they're gonna do you know damage it and not tell you about it you know what a small percentage of people do ruin those things and that problem services and we penalize them and when they keep doing bad things we kick them out meanwhile there are a million people sharing 13,000 cars parked around the world lastly I'm very selfish I only do things for myself and when I participate in these I get more than I give so I make three hours of reservations on Zipcar and I Robin chase personally have a car in cities around the world Wikipedia I added to stew an article on Wikipedia and I personally have access to five million entries in the world's largest encyclopedia I put in my little tiny thing and I get this whole big thing so I get more than I give and if I think about the world we're in right now which is so incredibly dynamic the pace of Technology change is so incredible climate change is pouring down upon us what is the future capitalism what is the future of work what I know is that this structure is the structure that enables us to experiment iterate evolve and adapt at the fastest pace and so yes I did put this in a book but you guys should be thinking how do I piers Inc my company what are the assets thanks Robyn it's a hard act to follow I think points well-taken I think as we apply those points to real estate it becomes even more impactful I think we work an airbnb are two good examples but these types piers Inc is creating an entirely new asset classes repurposing asset existing asset classes creating an incredible investment opportunity across the ecosystem of real estate and I mean you can credit Robyn for you know sort of bringing this about and really the AV deck that I'm gonna walk through today the foundation of that is really built on what she did at Zipcar so it's a privilege to be on stage right now the driverless car how's that gonna affect real estate I probably get asked this question the first question I get asked all the time is is we work worth 20 billion dollars the second most asked question I get is how our driverless cars can affect real estate values and when you think about at least what you read in the media today and everybody talks about lyft and they talk about uber and they talk about Google and all this stuff that is the least important question in my opinion in the sense that there are there are city blocks in New York that the hoos market cap is bigger than uber and GM and you know sort of the automobile industry the value that's gonna be created and destroyed in real estate is gonna dwarf what whatever value gets created in the automative industry by the advent autonomous cars and that's gonna affect everybody sitting in this room and real and meaningful ways I'll get into the specifics of how I think that's going to occur and what asset classes will be affected I do not have a crystal ball and honestly this is a conversation I think everybody in this room needs to have and I think the only way we figure out how to evolve with what this car is is is by working together and having these types of conversations so I'm just gonna start to scratch the surface why am I even up here and why are you listening to me hopefully by the in the presentation that'll become clear but let me at least pitch myself first so I run a venture capital firm called fifth wall it's a V see firm focused exclusively on built world technology this is a fancy word for real estate tech we are funded by the largest real estate owners and operators in the world for a very specific reason in that I want to know what these guys are doing before the market does and when I know that I want to invest that's really what the fund is premise on and I can give my portfolio Companies Act access to you know over half a half a trillion dollars in real estate and over seven billion square feet that's a sandbox at any entrepreneur we want to play in and when you think about how realistic how technology is infiltrating the built world that's only gonna happen in partnership with a large incumbents there is no kid in the Stanford dorm room right now coding on his laptop who's gonna disrupt pro logis he doesn't have 60 billion dollars in his pocket it's not to say he won't change the way people think about industrial and access it and all those things but unlike these other industries that were sort of born out of technology social media things like that the real estate industry isn't going anywhere it needs all of you it needs the capital markets it needs it needs regulation all the things that make real estate what it is today cannot be undone and the technology companies that define the future I think are gonna be most successful working in collaboration with the industry and not against it I won't get through the background because that's gonna embarrass me again after you know kind of listening to Robyn's talk oh I will I let one thing and I'll challenge Robyn's number number one principle of you can't defy physics the only way you can defy physics in real estate tech if it Blackstone backs you we were able to buy fifty five thousand homes in less than three years that's a little under two hundred thousand beds that we owned managed rehabbed and rented I'm not gonna live much longer than probably seventy after that but who wants to live that long anyway this is this is the the thing that we're talking about there is a meteor coming to a real estate it's coming fast and like I said before it's gonna destroy and create more value than anything you've seen in the past hundred years if you do not have a strategy on how AVS are gonna affect whatever real estate asset classes you are investing you are willfully behind the 8-ball I can't tell you exactly when this is gonna happen but this would be something you should be thinking about and we can talk about the specific asset classes that we're gonna that might be affected to know where you're going probably you know it probably helps to know where you've been read about Robert Moses I just wanted to throw this up there up there in terms of this is the man who sort of spearheaded this automative City the the world in which we lived in today was pioneered by guys like Robert Moses who saw the advent of the car and helped facilitate essentially the good and the bad that the car created in the environment that we occupy today the you know what automobile is defined in our modern built world is pretty much everywhere you look from discrete streetscapes and I would imagine and you know another 50 years there's gonna be a picture the horse is gonna be like you know a car like a car today and then that train is gonna be or though those automobiles are gonna be the Avs of the future and we're gonna be in that weird flux for a little while but the entire streetscapes gonna change freeways and suburbanization you know to Robin's point about environmental impact the this urbanization of America was the single worst decision in our country every made in the sense of what it meant but the environmental impact urban suburban sprawl is the most inefficient way for human beings to live obviously the economic impact that created for America was unquestionable you know a v's are hopefully gonna help solve a little bit of that but cars did have a negative impact and it created this orbit this suburban sprawl and it made things extremely inefficient it also increased the urban sprawl creating much larger MSAs that's only going to increase I think with AVS there's a profound change coming and it's gonna affect the entire infrastructure of real estate this is why we wrote a piece about Trump's infrastructure plan and and the hope that you know whatever administration can you know work their way to actually engage in this infrastructure issue that we have is that they build that infrastructure for the future they don't just repair it for today if we invest billions of dollars in u.s. infrastructure and it doesn't have a technology slant to it we are going to be building the wrong infrastructure and we're gonna be spending billions and trillions of dollars very soon to fix it there are countries that are far more are far further ahead than us in terms of how they think about infrastructure evolution that's that's asked some key questions everybody always asks you know where are we today in terms of technological progress autonomous vehicles today are pretty much capable in driving almost in almost all driving modalities I think Google's logged three million miles I think there's been over 30,000 rides in Pittsburgh with uber and autonomous vehicles they exist today they they they're not on the road at scale they're mainly in testing but the concept of Av works your Tesla if if Elon must wanted to can turn into an honest vehicle but in a you know in his factory of the flip of the switch that's that's why he's built what he's built the infrastructure is already available to us you know other things still have to happen cost accessibility and then regulatory approval the House unanimously passed a few months ago AV legislation it's probably the only thing they've done in the past year and that is actually putting things on a really great path to increase the usage of a V's at the state level so I'd say just a double-click here consensus right now it's 2025 I don't know if that's true or not just know that when that Kumasi commercialization does occur it's going to hockey stick it's not gonna this isn't gonna be a tic might mice 19 month old son will never learn how to drive and he'll think we're all crazy for ever having tried it that I can say for sure there's already proof points that are sort of pointing to the impact of this a lot of these topics are actually kind of highly debated debated especially car ownership there's a lot of conflicting reports but right now lyft and uber are proving that if you put these shared vehicles on the road car ownership it decreases and and and vehicles come off the road if you've been in New York and LA and San Francisco lately that doesn't seem to be the case but we don't have enough table data to prove it what I can say with certainty is that demand for parking is way down and that's based on my own research I'm talking to hundreds of CEOs of real estate companies all of them are asking me what the heck do I do with all this parkland and let's just sort of ass begs the question sort of what does this mean for us roadway and real estate infrastructure a whole host of things how we commute how we park how we live how we work how we get away how we shop how we build how we store again just scratching the surface and we could debate each and every one of these things the stats around some of this stuff are pretty incredible when you actually dig in seventy three minutes driving per day on edge with Americans hundred twenty four billion in in in in in economic development robbed by a congestion in the u.s. annual cost for traffic for each American seven seventeen hundred dollars that doesn't even take into account the fact that they prop in a shin and I'm Tom they probably don't even own their cars so there's additional savings that could occur you know three million in sort of emissions damage the environment there's economic impacts to the environment as well so lots of different things that happen based on the way we drive today again more with decreasing traffic and more comfortable commutes the productivity savings are dramatic there's so much time like we said wasted kind of at ten and two on a daily basis and if you can work sleep be entertained during your commute that that opens you up to do a whole host of different things that are hopefully much more productive this is just sort of what what we look like in terms of what vehicle ownership could evolve into right now we're at owner dependence with a little bit of shared dependence uber lyft and Zipcar on the bottom right quadrant will eventually move to a little bit more owned autonomy in terms of Thomas family cars some people at least in sort of the generations like mine who are used to owning their own cars might choose to have a navy that they own but eventually I just think it makes sense that we moved to a complete shared autonomy and having driverless essentially network of driverless cars at our at our disposal how we park again super staggering stats billion spaces in the US for for every person for every vehicle 61 billion square feet of parking space right for redevelopment a lot of that's infill 5050 sorry 50 percent reduction in parking requirements over the next thirty years I think it's actually more than that there are already groups taking advantage of these trends it's happening locally working ratios are a big thing and people are doing being creative about how they can get cities to relax those and leverage the shared vehicle ecosystem there's a I'm just a shameless plug for Cincinnati where I'm from dens are built a office tower that has three levels of parking that have traditional office facade that can be converted if and when the the city it lets them so there's different ways that you can prepare for this event reality how we live server suburbanization 2.0 the reversal of transportation premiums there whether it's shopping malls or its office buildings but sort of transit oriented real estate has always been somewhat of a gem in terms of the location and the rental premium that provides when sort of public transportation becomes more ubiquitous with the thomas vehicles there's a chance of the premiums on those assets actually decrease so thinking about that impact on how that affects sort of suburban real estate is gonna be super impactful below you just see the spread that exists today that could very well very well reverse how we work we're already seeing this happen with we work and others but a visa make a visa make commutes much more interesting in terms of where where companies can recruit an access workforce does it have to be in the cities can it be far afield can you move to different cities and activate a larger workforce based on a vs there's a whole host of thoughts around will service will urbanization increase or decrease with the advent of babies it's our view that urbanization continues to to increase but there's a lot of there's a lot of data that points the other way how we commute or how we get away hospitality and lodging this is going to be a big one you know Motel 6 is Redruth ins if you don't need to stop on a hotel adjacent hospitality asset why would you when you can sleep in your car do all those asset just go away so there's a whole and again this is a premise on a form and function change of a B's and you know will hopefully change the way people choose to travel how we shop this is a big one everybody always is always talking about right now this is the death of retail and you know AVS are only gonna help facilitate that what I think it does is provide opera soudanese for well-located Mulliner x' to turn their malls into what they've always they've always been or at least they've been they've meant to be which is community centers these are the town halls and they've essentially they've shied away from that and now have the opportunity to move back by creating more more nuance and experience or retail that's catered to that local community that they serve and the parking that they can redevelopment and well they can redevelop will allow them to do that we work very closely with Masek who's actually based here in LA to think about the parking opportunities of activity in this those parking lots to create really new experience always to engage their their tenants and their customers ecommerce the way we shop you're already starting to see this last mile is on every the tip of everyone's tongue Amazon's getting into the game in a big way per lot is one of our anchors built is building one of the first multi multi-level industrial assets in San Francisco and Seattle these are premise on the fact that last mile is going to become increasingly more important over time or even starting to hear whisperings of last ten feet in the sense of when that autonomous vehicle shows up your house how does that package get to your doorstep whether that's through a drone or a robot we're really trying to solve every every part of this thing and so there's gonna be massive implications here for lodges has been lucky to sort of be the the beneficiary of technology there they're performing extremely well because of where their industrial assets are located they've always been more infill and and they're riding this wave but thinking about how Thomas fleets and all those things and modal and intermodal facilities are going to impact their business they're definitely investing in a lot of technology that is promised on the advent of atomic vehicles actually occurring in commercial fleets first the cost obviously is a big driver of that how we build this is actually not happiness less in the US but it's actually happening overseas at scale Singapore actually is like mandate they've just decided instead of like telling people not to drive there Lily just shutting entire highways down you're gonna see in and I think very short order and entire freeways and byways we've literally converted to parks and walkways that's not gonna happen here any time soon but I think we're the advent of IVs that will become the park stand and and and and the living spaces that we're going to enjoy are going to be enabled by a v's because there's going to be space savings and streets are going to be much safer let me get you I'll give you two examples of how v Lal thinks about investing with this trend how we boldness changing a diesel trading the construction industry is actually pretty interesting there's massive labor shortage and constructed right now especially with with with with high quality labor that focuses on large construction equipment AV technology actually works really well on bulldozers and pretty much any construction equipment especially for like large grading projects when RB and one of our anchor investors is super interested in how they can leverage AV technology to potentially grade some of their large tract homes these these can work all day every day without resting they can work at night if the city will let them and they do a much better job of actually getting to the specific specifications of the grading that's required in order to build the home and there's tons of cost savings associated with leveraging AV technology I'm how we store Self Storage is gonna change we invested in a company called clutter it's actually based here in LA this is sort of premise on the fact that if you're buying in fill stuff storage you probably shouldn't be in the sense that self storage is just an asset class that exists in the absence of technology in the sense that the only reason why self storage facilities exist and into locations is because you need to be close to your stuff to access it with logistics technology why can't you store your stuff far afield have clutter come pick up your stuff barcode it make it Randall or on your phone take your things don't store it and don't store all your stuff in a box but take your mattress and store it with everybody else's mattress so it's it's it's it's stored more efficiently and do it in you know sort of the the vacant square footage of an underperforming industrial asset far afield the cost savings are real the customer experience is far better it's changing the scope and scale of what of what what self storage should and could be in the future renting your things on demand and you're just some actionable investment opportunities that we can debate and talk about but the tail winds seem pretty obvious urban parking lots for redevelopment CBD office space rule warehouses last-mile storage facilities well located in filler or suburban malls with large surface parking the best thing about well located malls is that the mall industry doesn't actually when someone builds a mall and an infill location it's not like there's another major mall right down the street they just go somewhere else so these these malls actually have very well located infill redevelopment opportunities and some of the best cities in the u.s. new development with minimal no on-site parking reduced parking ratios obvious stuff autonomous cart headwinds Airport parking lots you shouldn't be behind Airport parking lots I think la is actually like gonna build a massive sort of parking lot to facilitate rental cars which is going to be the biggest waste of money I think ever suburban office we talked about infill self storage we talked about suburban commodity retail gone convenience is now brandable online and at home so convenience in physical locations is going to be much harder to articulate highway adjacent hotels we discussed that's our presentation this is a massive opportunity and I'm excited for to continue this conversation with all of you and I think there's there's there's there's possibility for real estate destruction but there's also possibility for a lot of opportunities so thank you very much think what what we're seeing you know the interstate highway system fundamentally change our built environment now we're seeing autonomous vehicles have the potential to fundamentally change our built environment and as much of a significant way if not more Robin and I have had brief chats about a different view of autonomous vehicles that do you want to share that so right down to go look up YouTube Robin chase self-driving cars four-minute video which is the heaven versus hell scenario and we're going to get not this we're going to get the hel scenario if we just sit around and wait for things to play out because the cost of moving a self-driving car that's electric will be a dollar an hour so I just want you to put in your mind you can move your car for a dollar an hour you will never park it you will have it Circle the block so I could continue have a good conversation our streets will be 100% parking lots clogged disgusting horrible things and that is what is going to play out if we just let things go because that is profoundly economics will drive it and economics of self-driving cars when you take out the driver - in for taxis for - 65 % of the costs gone so it's just dirt cheap we know what happens when we underpriced things the flip side the heaven side which I wants you to encourage you all to fight hard tooth and nail because it will just make your lives fantastic is we only need 10% of the cars we have on the streets if we do some car sharing and only have I want to call them fleets of autonomous vehicles that are electric and shared faves and we can if we do that there's no on street parking we can repurpose all of those parking lots I feel like this is a do-over for cities we get this do-over cities completely transforming livability transforming what do we need green space here more affordable housing a hospital retail whatever it is we now have the space and it will just completely transform cities so I'm yearning for us to do the better path but it requires that we address things that you guys that not you guys the world doesn't want to talk about which is underpriced on street parking under priced co2 emissions air pollution under price congestion and we have to have to have to address those things before autonomous vehicles hit because otherwise it will be just terrible and let me have we started a little bit late so we're gonna go a little bit later I'm sure there's someone from uoy out there who's terrified that we're not going to keep today the ending schedule but this conversation could go on for much longer than 15 minutes obviously if you have questions come to the mics and we're not going to wait till the end for questions so please come on up you both mentioned something about surface parking lots we have a ton of them especially here in LA and downtown they've been changing a little bit but it airports at shopping modes wherever it might be if they become obsolete do we then have a land glut can i justit istic that i was just told thirty on average in the US cities 30% of the land use is car associated just 30% and there's a study that was done of Houston and it was 67 percent goes to cars parking lots it's just astounding so yeah just imagine I mean the important thing to double-click on there is the affordability issue in most major cities and I think with with more square footage becomes more developed more developable area and hopefully with the right people and the right priorities becomes solutions to those very important problems so but if if we're then getting maybe not getting rid of but if we're automating construction if we're automating driving right there's there's a lot of jobs that start to disappear and maybe the costs come down but it sounds like that has a potential to right these babies replacing the trucking industry it's going to be the same one of the biggest sort of one of the biggest economic issues we'll probably face in quite some times because that's the second largest employer in the u.s. right now this is the technology existential question that we're all gonna wrestle with I don't have the answer I'm definitely dancer that question but you're right I mean we have to think responsibly about how technology affects greats heaven in hell scenario just some some statistics around that that yes it's going to create what I like about I like about the autonomous vehicle job loss is that it is pervasive across all economies urban and rural it's not gonna be Democrat versus Republican spin it's not gonna be white versus minor ease because their drivers in every one of those categories in every geography so it gives us the opportunity to refresh the social contract with labor what are our responsibilities and we're gonna have to have an opportunity to rethink about that discussion I'm the piece around job loss versus job gay and I also want to put in is that from a transportation perspective there's these two longitudinal studies that Harvard did that the single largest barrier to escaping poverty is access to high quality transportation so when you can so wow this is cutting off a bunch of jobs your ability to go find jobs that are farther and harder to get to is dramatically improved and so on that balance there'll be many more people who are getting access to jobs they're losing jobs but it's definitely a drama and we have to think about what we want to do in that and the cost benefit that you mentioned just plays into that so it seems like coming out of the Great Recession which still wasn't that long ago that seemed to be the rise of a lot of the sharing economy was that a response to the downturn and one of the questions I hear a lot what happens in the next downturn what we haven't been through a scenario where we work or any of the shared services if you will have lived through a downturn um I want to speak to that zipper was founded in 2000 and it was totally fascinating to me so I will remind you of September 2001 we had just launched in Washington DC it was with extreme excitement that I call up my board members and I want to remind you car rental completely flatlined travel basically flatlined and subscriber 20% that month and I could say you know what this is a utility whether it's a good time or a bad time people want to be sharing these vehicles and using them to drive so I think the sharing economy took off in the areas times you're talking up because that was when smartphones were becoming cheap and ubiquitous GPS and apps were being built so it was the beginning of this easy access I want to say the sharing economy that that I think it was different from the collaborative economy of sharing physical stuff we've seen its success in those places of the most expensive items houses and cars and stuff sharing has been hard coming because the transaction costs for really small benefits are still challenging um that said I think there's just in the real estate space there is so much Idol built and unbuilt space is just you just walk down the street and look at all those ground floors of reception area languishing or the unused gym or the unused swimming pool what could you be doing that soon to be unused parking space I mean listen I mean it's not entirely true that there hasn't been sort of a company that has a similar business model to go through a recession Regis was around well before we worked it's not to say that the business model was exactly the same but similar concepts in terms of the contract it was built on and they filed for bankruptcy whether or not technology is just a faster road to the bottom I think to your point is is actually an interesting thing and I think with the next economic downturn we'll see how resilient they are but I think the reason why a lot of these companies I think grew out of the recession was I think really premise on what Robin did leading up to that in terms of I think the mobile-phone points a really good one but changing consumer behaviour super hard just like building the marketplace and I think the change of the hearts and minds that Robin was able to do with a Zipcar I think just like perfectly coincided with that with with the downturn so that coming out of it the consumer base was better educated to access those types of things and allow them to grow a lot faster because you what you everybody didn't have to convince somebody to have a room in somebody's house or convince somebody that they should have a smaller work space so I think it was it was a perfect timing for that and just feeling on that one of the interesting things when I was doing this approach this is easy to say to you guys is that the benefits just this changed mental model of accessing an asset instead of owning it so instead of you guys are all most of you are driving around in your minivan without any children whether or not you're going to some on a hot date with your spouse going to visit some business meeting driving in downtown traffic whereas what Zipcar showed was whoa who'd have thought that I can get the car that meets the trip and I can have a car in every city in the world at this in 30 seconds in 30 seconds I can have the car where you're still and I never maintain them so these huge benefits to sharing that is way outweighs ownership and you pay spend less in a year so I just I look at it and I think when we were in that mindset we thought that was the best mindset but when you go into this different way it's dramatic better it's really it's really about a more perfect union between supply and demand and what that's that's that's rendered in the sharing economy or or even just in a sense that in the residential housing industry today I'm sure everyone here has a strike price on their home in the sense that I sell their home if someone offered them a certain dollar amount and the fact that that that isn't rendered across the u.s. to make sort of moving more more easy and everybody's transient now that the fact that it's so difficult to get out of these assets especially when the price tag goes up that's what this is really bringing about and these lot of these companies are taking that that theme it's a marketplace or a transaction platform the more perfect you find a man is gonna create a lot more opportunity yes I love that as a really short form of that and I was just spending a couple years in Paris where people don't own houses and I was thinking about the us-run labor market shifts we are stuck and bound by our stupid house like I can't be as fluid as I want when I'm owning this asset and so that would be an incredibly negative aspect of ownership versus rental so there's these really great aspects of rentals that I can follow the job markets and I don't get stuck yeah so you said everyone wants to talk about we work so I don't want to disappoint you question about we work so they just spend 850 million dollars to buy Lord and Taylor in Manhattan yep and it's has anybody been in Lauren Taylor in New York anytime in the last ten years yeah I got paint okay okay so it's on Fifth Avenue it's an iconic building so you have an a location in a prime city yeah possibly at Market Peak or close to it possibly and you have an old-school retailer converting the the building converting to a new economy if you will office user yeah is this a single transaction or a larger listen signal we work we work it's been incredible things they've done to really things that I take advantage of every day one they prove in two centers that office spaces in a commodity and their tenants aren't tenants they're customers and the other thing that I'm betting from is they woke in the sleeping giants every major landlord right now wants to understand how shared space is going to affect their buildings and they want to be a part of that trend and it's really just premise on the fact that it's the same sort of logic applies you don't own an office building on a multi-family I said you own space and people pay you to access and you need to be in a position to provide whatever that would whatever whatever a common state accommodates that customer you need to provide the space that accommodates that changing and growing need and and I think Adam and the guys that we work have done an incredible job of doing that at scale what happens and this is sort of vc run amok is that you you get massive capital infusions and then you start to have to make decisions to justify your valuation the only way to justify $20,000,000 vation today is to own 20 billion dollars in assets the recent article that quote that he was our multiple is on spirituality and and enthusiasm is sort of I think a symptom of that so the we works model isn't going away this is this is not it's not a fad this is where the workplace is going it's not gonna infiltrate a hundred percent of it it's important but yeah buying assets at the top of the market isn't gonna help question one of the blindfolds that we have with new technology is that we tend to think of it in relation to how things have worked before so with autonomous vehicles do you see it more as people going to play as more as transportation or more as architecture or so are things coming to people or people going to things and how does that change our urban for me that's a good question and I was just reading about Trump's executive order tomorrow to make it easier to have drones and I think if we don't address the costs to people in the cities yeah we'll be using cars and drones to deliver Robin toilet paper because she's too lazy to go downstairs let me open the window so I don't have to walk two blocks to CVS like and how many people that inconvenience and so I think it's all about the cost piece and getting that cost right I mean I think I mean people ask the same question with the oven in the internet well are people just gonna sit in their homes all day and then hang out online obviously proved not to be true that's the most important question to answer but I don't think I don't think it I don't think it makes us more insular I think it enhances our ability to keep to add to the community you both in talking sort of seemed to give me the sense that you guys are very comfortable with the concept of supply demand price using price as a way to figure out you know where supply should be created and how to unlock that I think everything that I'm seeing in sort of both national and local political debates and left and right is a complete discomfort with the concept of price so when we see affordability people don't want to hear that that means that we should unlock some supply you know when and so I'm sort of wondering what is this way do you have a way of talking about price that feels optimistic and exciting that we can use in our business in a way to push you know are our cities to where they need to be for us and when talking to some more bankers it's about it's about space it's about thinking thoughtfully about space utilization and activating more square footage technology allows us to live in in in in in different forms and functions and sort of building assets the way we've always built them I think is is a relic of the past and needs to change and there's a host of things that will accelerate that you know augmented reality on all this stuff that's that's far there much farther down the line but it's really about thinking more thoughtfully about you have space how do you activate more of it how do you understand the demand that that could that could that you could essentially this sorry the demand that you could essentially invite into that space and just know more about it you just when you build a multi-family asset you try to price it based on you know sort of market comps and you hope for the best you can think much more creatively now that these technology organizations have created different ways to render form and function differently um I want to show you to send you to another website that just got launched a week and a half ago called shared mobility principles org and those shared mobility principles was ten NGOs I got them together to come up with here's what we all believe well part of number one is that you need to be building cities and transportation together and I was just at uber yesterday talking to me about I think there's this whole piece around story which one of your items around mission see that um when you have housing and transportation together as costs from a city perspective there's amazingly good arguments why we should be having more dense news right I think you guys all know those and so start so continue to push that story line that stops separating these two things together when you think of them together it is clear that we want to have dense mixed-use that includes mixed economy within those and that we want to figure out how to make better use of the streets the lanes the parking the sidewalks the land because it is scarce and oftentimes that leads to that requires in congested areas or so for the markets for land we do use markets to get the right price point but we don't do that for curbs pick-up and drop-off we don't do that for parking we don't do that for lands and we need to start introducing that so it's in the serve mobility principles that I'm working with hopefully cities around the world and developers and everyone to if we can all focus on these agreed principles and a breed that is best for cities I think we can start teasing out stories that the private sector can talk to the public sector on and keep in mind there are multiple parties that need to participate in making that a reality right it's very hard for you let's see you own a multi-family asset like you know I'm gonna do what's right I'm gonna convert fifty percent of it into micro units so I can you know provide more affordability for more people and then you go to get a refi on that building and the bank tells you I can't under 8 this what did you do like I don't know what the cap rates gonna be when you sell this that requires capital markets asset owners the whole ecosystem needs to come together and say this is what this is what consumers want how do we provide it to them and but how do we keep the constructs to keep you all engaged and investing in that future and we were talking earlier about about highest and best use plus yeah I want to say I like I think we all agree it's really hard and there's so many different stakeholders and all the existing legislation existing regulation is it's not our friend right it is not pointing us towards this future and so I just keep trying to whenever we're doing regulatory stuff talking policy to point out this is how we got into this mess because of these rules these rules all Ledley to the same backspace' so how often are you guys getting involved in public policy discussions I'm in public policy discussions all the time and that I'm talking to leaders of cities around the world whenever I can ever get a chance which is monthly weekly the were involved with quite a bit okay yeah all right my company year and I'd are working on incorporating some of this ground vehicle autonomous ground vehicle technology into aerial vehicles so looking forward into a future where there's a level 5 autonomy and we don't have to have a driver actually behind the wheel of our shared electric vehicles what do you think like or at least why do you think we're limiting our thinking to enabling these grounds like this ground vehicle transportation when autonomous aerial transportation offers some really unique solutions and potentially in a very similar timeline um so I just want to speak to dense urban areas um I the Jetsons do you remember he's standing on his door it comes and gets it I mean I just was looking this up to take the clip and something like 1997 they would did a movie version of the Jetsons and what I loved about that movie version of The Jetsons which I just only have to say this particularly is so you have him get into his little you know he opens the sliding glass door and 85th story steps out and he says bye honey anyone goes and then is he goes up and then it's like jam into the traffic jam in the sky of course it's not as if we're gonna be having you can just fight anywhere at any time obviously not gonna happen and so I feel like this answer is over just it's not like it's free space you're gonna go up and now you're gonna have all the same rules the same piece and so for me when I come back I had to say I am so I'm giving you the argument against is it's not like it's gonna be free space or and have very rigid areas in which you do it and the the impact on the millions of people who are living those cities is going to be so much less value than what is being delivered although I did hear between two hospitals and bus and they're medevacking by drone some crazy thing I think great so let's put a price on it and you can't do toilet paper and toothpaste because I'm lazy I didn't go get the book deliver it to me know the challenge of building physical roads as opposed to just kind of flying an airspace even if it's still a traffic jam do you think there's any value and not having to build that highway I think there is so I was talking about dense urban areas and so yes in places in the Amazon in Africa where it's like terrible roads whatever and also not so populated definitely the infrastructure doesn't exist and it's not bothering that dense of populations so I think there are use cases but it's not in dense urban areas are you looking at any would take to make that a reality number startups yeah yeah where that's outside the realm of Heinz doesn't really care about the the airspace above its towers right now it seems like both of these trends the better utilization of excess capacity and autonomous vehicles have impact more than anything else the the largest real estate s in the country which is the detached single-family home obviously as Robin noted in other countries they're pretty wildly different approaches to home ownership and I just wanted to see what you all think and say 20 years homeownership will look like in the United States both from a you know numbers perspective you know whether the overall number increases or not but also what they detached single-family home look like will it change in appearance because of these two trends let me before you answer we we have two more questions after that and I think that's going to be Y also I think in there's been the short to medium turn I don't think the format function of single detached single-family will change all that much I think assuming that Millennials are not going to move to the suburbs I think it's short-sighted we're gonna I'm a millennial I haven't moved there yet but I only have one kid come to I'm probably out of here and that that's just gonna happen later will homeownership reach peak probably not Lennar one of our the second largest home builder in the u.s. I don't know the answer this question but I would assume that that organization doesn't think that they're gonna get back to the housing starts that they had prior to the peak and that's actually creating new and interesting opportunities for them to think about how to engage their customers well beyond the point of sale which is pretty interesting yeah I think I think I think at least for the next generation it's gonna look similar and you're gonna see a lot of families going to the suburbs to access the schools and all the things all the reasons why people do it today but that's that's the that leads to the hel scenario that we were referring to in the sense of like nothing that just doing more of the same I'm not as optimistic about the heaven one can i distant but since this isn't the last question I want to be the extreme debbie downer that my children would be saying Robin don't say what you're about to say if you put climate change advanced by 20 years on addressed it's a totally different scenario the refugee climate migration and the economic chaos that's about to happen 20 years is it is going to be very very very chaotic and so I and I and I want to say a lot of people in the environmental movement are thinking what's their plan B and that is a seriously 20 years out for me I can't even imagine 20 years out if we don't address this issue and you just look at what's happened in the last year I guess one of the things I love about Elon Musk and Tesla is the fact that he's putting so much time or effort and energy and this people-mover concept I would love to get your opinion someone who's invented zip and someone who's doing an AV company what's your opinion about the future of public transportation do you think it's important or do you think public transportation and the way we use it with ridership being down in buses ridership being ground down in trains is it just a reflection of how our society kind of dislikes each other that is such a I want to say as I don't think that this will last year and a half that is like D I feel like that is where the battle that's gonna be the biggest fight and um and I keep coming back to my price points is that in New York City and in San Francisco right now they're really pissed off they've done Studies on uber and lyft and it's taken seven percent ridership have come out of transit and into uber and lyft and I think that is a rational choice because I am under during peak time during peak times it is a rational choice because I have crummy trans public transportation you are letting me charge Drive alone in my car down Fifth Avenue that's a crazy thing so I believe that we need to have a continuum of shared transport that's gonna go from mass transit moving thousand people on a train up to one person in their car and we need to make this you know two four six eight twelve twenty people and then going to public transit and we need to be paying congestion pricing per square yard moving that is the operative piece on streets and if we can get that right and start talking about it today in dense urban areas in Manhattan you profoundly need to have public transit and my talk about people in Mumbai and Bogota they're moving six people per square yard and some I was talking to when they're moving 12 people per square yards so clearly people can not be moving to taxis these we have to move massive numbers of people and how do we finance that when it's toward peak times and other peak times you want to so we need to do a congestion charging we need to fund public transit but in many places public transit will disappear so in Bloomington Indiana they only have buses is the lightly settled place there aren't gonna just I don't think there's gonna be any public transit I think we'll have private public transport and then one just peace around income inequality and the head virginity of today's in the major cities in the u.s. there is a hetero Jean economically heterogeneous people in on public transit so it's a place where people do magnet meet up in the self-driving world even if I'm sharing with four or six other people from origin to destination I'm going from my homogenous not inequality fancy Poor's place or rich place to my job and I'm not going to be ever mixing with those other people because the origin destination points are not mixed and so therefore when I'm going origin isn't I will not mix so now we're really going to get in trouble we have to be a little quick but no pressure the year 2025 seems to be the general consensus for widespread adoption and I'm curious what that means for smaller Midwestern cities this summer I was on a dirt road on the way to our family farm so I'm just curious what what does that mean in the year 2025 I think there's still I mean I'm from Cincinnati Ohio that's not really that rule but it's definitely the Midwest I think it's it's that question of all of all modalities in terms of will ladies be able to sort of navigate you know well articulated ways not I think there's out I think for the time in the near term you're probably gonna be in your normal car doing that but eventually a securitization takes place that car should be able to navigate any situation you put it in regardless the fact that google mapped it at some point in the past that's really what mask that's really what mask commercialization means in the sense that that car is capable of driving it in any terrain at any time just to put a fine point that when you read in the press about this there are these different levels and automation and level five is what you imagine which is anytime anyplace anywhere I think that is 25 or 30 years out but I think possibly by the end of this year we're going to be seeing serious examples of level 4 which is geo-fenced and that would be in some cities like Phoenix where there's no snow when it's very flat and there's no pedestrians and you'll be seeing it imminently really short so it's gonna depend on what your city is and level four which is to you offense right that's anytime [Music]
