Rethink Real Estate. For Good.

Technology

Architectural entrepreneur.

Atif Z. Qadir, AIA is the Co-founder & Chief Impact Officer of Commonplace, a market network at the intersection of real estate and capital markets. He is a Registered Architect and LEED Accredited Professional turned entrepreneur with a particular interest in housing and impact. His strengths are observing, asking, analyzing, and using the power of narrative to uncover, share, teach, support, advocate and champion. He is a builder at heart, who is comfortable in different scales and settings – from small workforce housing units to multi-billion dollar redevelopments, from podcasts and panels to public service, from nonprofits and academia to private equity & venture capital backed companies, and from design to finance to public policy.

Atif is also a Founder & Partner at Amanat Properties and serves on the Planning Commission in the City of Hoboken, the Advisory Council of Provident Bank and on the Board of Trustees of The Hudson School. He previously worked at Extell Development and Turner Construction. He began his career at Rafael Viñoly Architects and Boston Housing Authority. He studied at MIT, where he received dual bachelor’s degrees in Architecture and in Urban Planning, and at Columbia Business School, where he received a MBA focusing in Finance.

His work has been covered by MIT Technology Review, Commercial Observer, Propmodo, and The Real Deal. He’s also a frequent speaker on the future of buildings and cities on popular industry podcasts and at conferences, including this past year at the Commercial Observer National Diversity & Inclusion Forum, Yale Alumni in Real Estate Association Conference, the Columbia Real Estate Symposium, NYC Open Data Week NYC and Austin Design Week.

Read the podcast transcript here

Eve Picker: [00:00:04] Hi there. Thanks for joining me on Rethink Real Estate. For Good. I’m Eve Picker and I’m on a mission to make real estate work for everyone. I love real estate. Real estate makes places good or bad, rich or poor, beautiful or not. In this show, I’m interviewing the disruptors, those creative thinkers and doers that are shrugging off the status quo in order to build better for everyone.

Eve: [00:00:39] Atif Qadir is a serial entrepreneur, but that’s not where he started. Trained as an architect and urban planner. Atif decided pretty early on that what he wanted was to work his way up the ladder from servicing developers as an architect or builder to being one. So, he started developing his own small properties. And as his frustrations with finding project financing grew, so did his entrepreneurial ideas. He launched Commonplace, a fintech platform with a mind to create a marketplace for emerging developers and investors. Dating for development projects. In amongst all of this and in partnership with the Office of Michael Graves, Atif hosts a podcast show called American Building. He’s a high energy guy. You’ll enjoy listening in.

Eve: [00:01:40] Hey, Atif, it’s really good to have you on my show today.

Atif Qadir: [00:01:44] Thank you so much for having me on, Eve.

Eve: [00:01:46] Oh, yes. It’s going to be fun! So, you have a very multifaceted resume, lots of fingers in many pies, but your background is fundamentally architecture and planning. And then you went on to get an MBA at Columbia. What prompted you to transition from a registered architect to entrepreneur?

Atif: [00:02:08] Sure. So, the job that I had before going to business school was at Turner Construction, doing construction management for huge projects in the New York area. And for me, I had thought that going from architecture to construction was higher up in the food chain about actually be making decisions. When I realized that as a construction manager for a developer, I still wasn’t making any decisions. I was executing on decisions, but I was telling the architect what to do. So I sort of had moved up in the food chain but not quite to the the decision making power center yet. So, I knew there was a few more steps I had to go.

Eve: [00:02:45] And what was the top step you were attaining to acquire.

Atif: [00:02:51] At that point? I think it was being a developer, but then not to bury the lead, I realized that even being a developer is not the top of the food chain because now you’re answering to the investors, so, and the bank most importantly.

Eve: [00:03:02] Always the banks, always the banks, right? But anyway, you can definitely, as a developer, you have more control over more aspects of the project, right? Not just, and that’s a lot more fun, right?

Atif: [00:03:14] I think it’s a lot more fun. I would say the way that I describe being a developer in the context of, say, jobs or roles that are easily understood is I think a developer is a lot about being a project manager, an accountant, a janitor, a babysitter, a therapist, a divorce lawyer. Like all of those things is all the skill set of being a developer.

Eve: [00:03:38] Well, I would add artist to that.

Atif: [00:03:40] Oh, yeah, yeah! Artist, of course, yeah. Sometimes it’s easy to forget that one.

Eve: [00:03:45] You’ve got to use that side of your brain to really envision things, right? If you’re going to do a good job of it, right?

Atif: [00:03:51] Of course. Yeah. I think that there’s this great quote that I saw on LinkedIn. There’s a gentleman named Tyler Sumaila who does coaching for architects about how to think and how to present themselves the value that they bring. And I think there’s a lot of similarity between what we’ll say for architects and developers. Basically, it says teaching an architect is like teaching a baker how to bake every bread that’s ever been made before and how to make every bread that could potentially be made in the future and not teaching them how to run the bakery. That’s essentially what an architect does.

Eve: [00:04:25] Actually a pretty good analogy. Yeah.

Atif: [00:04:27] And feel developers are maybe like a shade similar to that too.

Eve: [00:04:30] That’s true, that’s true. So, I’m going to explore three of your companies. They were the only three I could find so far.

Atif: [00:04:38] I’ve tucked to a few more into the side.

Eve: [00:04:40] If there’s a few more just let me know, okay? But the first is Amanat Properties, which is perhaps the most traditional of your companies. That’s your development company, right? And what type of projects do you focus on and where are they?

Atif: [00:04:54] Sure. So, it’s in the Garden State, the great state of New Jersey, and the types of work that I do is historic redevelopment on a small scale. So, these are the projects that completed are a rental building in Hoboken where I live, and a condo building as well. And then I also have a workforce housing portfolio of 13 different assets that are, I purchased them as Class C and then brought them to Class B with renovation. And those are in Hudson and Middlesex County in New Jersey, which is the I-95 corridor.

Eve: [00:05:30] Oh, okay. And what drew you to this niche?

Atif: [00:05:33] So I would say from a few different perspectives. One is from the geography perspective, once I moved to New Jersey after business school, I realized there’s this whole amazing place called New Jersey and Hoboken and Jersey City in particular is the half price clean version of Brooklyn. And I was like, there’s so much value, so much value there. So that was I think the geographic reset was really important. I think number two was having spent a couple of years at Extell, I realized that at a very prominent real estate development firm like that and perhaps others, there’s a glass ceiling that you come to. And of course, it’s based on gender. But there’s another layer, of course, on that, which is if you’re not the family member of the founder of the company, there is a limit to how far you can go. And in this particular situation, Gary Barnett, the owner of Extell, very intelligent, very prolific developer. All of his daughters were already married so there was really no option for me to join the family at that point. So, I started considering the other options.

Eve: [00:06:43] Was that your way in, marrying a daughter?

Atif: [00:06:45] I would be so good as a house husband. I would kill it as a house husband. But unfortunately, that route wasn’t available. So that was the second thing kind of draw out. And I would say in particular, when it comes to fixing, I’ve realized over the course of my career that my nature is actually very much more a fixer and a bringer together and a resolver than my nature is as an executor as opposed to a creator. So, for me, I actually enjoy the idea of historic redevelopment significantly more than vacant land. So, I think all those reasons were the influences that brought me to do development the way I described it to you.

Eve: [00:07:28] And so what are the unique challenges that you faced?

Atif: [00:07:32] Yeah. So, I think the most often thing, when ask this question to other developers, it’s how much time do you have?

Eve: [00:07:39] Go, go for it.

Atif: [00:07:42] Go for it, do it. I would say, the three that I would say come to mind right away, number one would be access to capital. So, I think that for me, for my deals, I had probably done a hundred tours of Hoboken and Jersey City to raise $8 million from a small handful of investors. And then I talked to 35 banks to get the debt that I needed for my two development projects. And I still ended up having to use a mortgage broker.

Eve: [00:08:13] And why do you think that is? Why is it so hard?

Atif: [00:08:16] I think that fundamentally it boils down to this issue of a supply and demand mismatch. And I think at the smaller level, there is an array of potential investors, but none of them are institutional level and being able to actually find them and find them at the time that they have the money to give to you is really like the whack-a-mole challenge.

Eve: [00:08:39] It’s a huge challenge. So, you’re talking about what I call the $10 million check problem, right?

Atif: [00:08:44] 100%. I was just talking to Caleb Ratinetz, who’s a principal at Asland Capital Partners. So, a mid-size equity provider for residential inclusive of affordable housing. And he’s like, asked me like, why wouldn’t you invest in projects where you’re cutting checks of three, 4 or 5 million? He’s like, why? They’re bigger headache than me for like a $10 million check and even a $10 million check is a headache.

Eve: [00:09:09] Which is a really big problem because that means that emerging developers, disinvested neighborhoods, all those things that you and I probably care about get left behind because I think that gap is widening and widening. It’s not, it’s probably no longer $10 million and it’s probably creeping up to $15 million.

Atif: [00:09:27] I think it’s inflation is now like 30% a year.

Eve: [00:09:31] So that’s a huge problem. And has that slowed you down in the projects that you’ve been able to? Well, of course it has.

Atif: [00:09:41] Come to think of it like this, is that if it took me, so 2018 is when I acquired title to the two properties and both of them were stabilized by the spring of 2020. So, it was two full years to do two projects that were under $5 million each. I just like, imagine the amount that I could have done. I could have done eight townhouses or like eight small multifamily buildings in that time if I wasn’t running around doing the dog and pony show for investors and for lenders. So, I think the volume of stuff is definitely what ends up being affected.

Eve: [00:10:18] Okay. And then, like, what does your team look like? Who are you working with? Yeah.

Atif: [00:10:24] Yeah. So, for Amanat Properties, it’s a one man show. So basically, I JV with a company called Hanini Companies, Hanini Group sorry, and that’s in, based in Newark, New Jersey. And the construction is sometimes from them and sometimes from a third party. Architecture is from a third party. The development soup to nuts is my responsibility, including the expediting, because I tried an expediter and that’s not a good idea. So, I did not decide to go down that path. And then asset management, all that stuff is me. So that’s essentially the way that I’ve broken down Amanat Properties. I’ve had probably at least a dozen interns over the course of the years that I’ve done development, but it’s more because it’s fun and I like teaching as opposed to like actually having any benefit from it for me.

Eve: [00:11:12] So Covid must have slowed you down a bit.

Atif: [00:11:16] Covid messed a lot of stuff up. And I think in particular it was the idea of the left hand not knowing what the right hand was doing when it came to government decisions as to what work was considered essential versus not. And it was as crazy as the state of New Jersey declaring certain trades as essential, and the city of Hoboken declaring others as non-essential. And then even when they were declared essential, oh, City Hall was closed for a few weeks. So, we were never getting the inspections that we needed anyway. So, I think that that was the biggest frustration. The banks, I thought my banks, they were patient. My investors were incredibly patient. It was the municipal approvals and all of that stuff. That was the problem.

Eve: [00:12:02] And coming out of Covid, like we’ve heard a lot about the disarray of the commercial real estate industry and how is that impacting you? Do you have a next project lined up? Is it harder than it was? Even harder than it was?

Atif: [00:12:17] Yeah, I would say the biggest issue that I am foreseeing is this reality. So, I’m talking to a chief credit officer of a local community type bank in New Jersey and said, oh, so how are you doing with new commercial real estate loans? And he’s like new commercial real estate loans? What are you talking about? And I was like, no, like, seriously, aren’t you deploying capital? He’s like, only for Perm and only to people that we’ve done business with before that have a significant amount of cash at our bank. That’s it. And that type of a of a response. I heard maybe a slightly more liberal like version of that from a super regional bank that I do a lot of business with. And then from the Wall Street and the larger banks of the community development banks that are operating in this space. For them, it’s generally business as usual, but the issue often is that the checks under $10 million, like there’s no use of, like they can’t do them anyway. Before they wouldn’t do them and now, they wouldn’t do them. So, I think it’s the evaporation of options, which is the issue right now. And I think coming forward for the next two years, it’s not going to get any better.

Eve: [00:13:30] Not going to get better.

Atif: [00:13:31] Yeah, there’s about $1 trillion of commercial real estate debt coming due dominantly in office and retail and dominantly held by regional and community banks. So that the lender that would lend to people like us, no, they’re not, they have bigger issues now.

Eve: [00:13:49] Right, it’s pretty difficult times. That’s really depressing Atif, but it’s really true and I think the bank collapse earlier this year is also going to make lending even harder because now experience will count even more. So, it makes it very difficult to start a career in real estate, you know.

Atif: [00:14:08] I feel like experience is often the catch-all term to incorporate many shades and variations of biases together, because the quintessential problem many of our colleagues, when we were together at the Small Scale Developer Forum that Jim Heid runs in Philadelphia, the last one, is that is the chicken and the egg problem. How is it possible to have a diverse group of developers in this country when your requirement is to have done 50 projects already? So, unless you were born to come out of the womb with 50 projects done, how would one even do that?

Eve: [00:14:42] Yes, it’s a very big problem. Very big problem. Let’s move on to the second company, which is now called Commonplace, which I think probably, I’m guessing, addresses some of these issues. So, what does Commonplace do? What is Commonplace?

Atif: [00:14:56] Sure. So, Commonplace is not a real estate development company or an investment company like Amanat Properties. It’s a technology company and it’s one that’s considered a startup. So, we have venture capital financing. And what our mission is, is to help impact developers be able to access capital more easily in order to do the good work that they’re doing. So, we’re a team of six, based in New York, and our focus is on making double opt-in qualified introductions between impact developers as well as capital providers. That’s our first product. And from there we’re building out a suite of other activities and initiatives and products that we hope to release in the next couple of months.

Eve: [00:15:45] Interesting. How far along are you with the product? How many introductions have you made?

Atif: [00:15:50] So we’re about 150 a week is where we’re at right now. So, we’re starting to now do the, like the assessments from the past quarter of how many went to first conversations, how many went to second conversations, and how many went to term sheets. And I think over the next quarter, we’ll be able to reassess that as well. But essentially what we’re, we’re approaching the problem from the perspective that the issue isn’t necessarily technology, and the technology is the accelerant of something like this. But the issue often is simply the relationship not existing. So, from that perspective, we’re taking actually, frankly, a low tech approach to the introductions and then implementing technology in different layers to make that accelerated. And we’re actually seeing this as the test case for us to be able to deploy something that is more robust and more technology native, which we’re calling Capital Applications. And that’s a product that we’re excited to launch with six capital providers in the next couple of months.

Eve: [00:16:53] Oh, interesting. So, when did you start Commonplace?

Atif: [00:16:57] So commonplace. We started in its original iteration in 2020 as REDIST, which was a software as a service company focused on data related economic development incentives and then Commonplace, we relaunched as Commonplace in May of this year.

Eve: [00:17:15] What prompted you to reimagine it?

Atif: [00:17:18] So I mean, I thought when I was banging my head against the wall and capitalizing my deals that, gosh, it must be economic development incentives that’s going to solve, they’re going to solve all my problems. And I was like, these are really hard to figure out and find and learn and get. So why don’t I put all the information together and I’ll make my life a lot easier and probably that of developers. So, we did that. We gathered all the data related to 6000 different incentives in 13 states. We curated all the content and wrote that up in a way for developers to understand, and we piloted that with 250 companies. We had paying customers. And often what we heard from our customers and from the folks that piloted our product was this is great, could you help us find debt for a new construction multifamily project in Detroit? Because we don’t know any community banks in Detroit that want to fund new construction right now. Or, like another classic one that we heard was, oh, I have all the capital from my 80 different sources for a repositioning of a historic hotel in a majority minority neighborhood in Chicago, but we just need another million and a half of equity and we don’t have any more friends and family to go to for $10,000 checks. Could you help us find some more equity? My favorite one was a developer in New Jersey who had said, oh yeah, we’d love to get debt help. We need help with debt besides the incentives. And he’s like, you’re a licensed architect, would you, could you also design our whole development for us too?

Eve: [00:18:54] So are you adding in design services?

Atif: [00:18:57] Oh, no, I’m not going back to that one. And also, it’s been so long since I’ve gotten CAD, but generally the three people that I’m describing all were of a similar style person, which was a midsize impact developer that was developing in a majority minority area. And we realized like the similarities again and again, and that’s what made us take a pause, spend a couple months, do a bunch of research interviews, go through our notes again and figure out how we want to address the same problem in a different way.

Eve: [00:19:27] Really interesting. Well, that brings me to the final one of the three I know about, and that’s called, the podcast, American Building Podcast, which you host. Tell us about that and what motivated you to launch it.

Atif: [00:19:41] Sure. This was motivated by the magic of LinkedIn. So, the new CEO of Michael Graves Architecture and Design, His name is Joe Furey. He has the three letters after his name it’ not AIA, it’s CPA. And he is probably the most fascinating head of a design firm that I’ve seen because he’s no nonsense. It’s like, let’s get to the point. And I think particularly for firms that are going through transitions where their founders have passed, particularly when it’s a very iconic founder, it is, not in every case, but I think it’s a challenge I’ve seen in several different places to transfer the business development responsibilities to the new generation. So, long story short, Joe was following a bunch of my LinkedIn posts that I did when I left Extell because, I mean, given I wasn’t developing because I couldn’t find the equity and the debt fast enough.

Eve: [00:20:35] The capital, yeah.

Atif: [00:20:36] So I had to fill the rest of my time doing something. So, I was making LinkedIn posts and Joe saw this and he was like, hey, you seem like a really interesting guy. Would you want to come and just grab coffee? I said, funny enough, I’m actually at my parents’ place, which is like five miles away from your office. Let’s meet tomorrow morning for coffee. So I met him and then I invited him to a panel that I was hosting at the Harvard Real Estate Symposium on Entrepreneurship and Intrapreneurship within our industry and we just started, on the way up, we were just like talking a lot about how does he, as a firm, reach out to a new generation of potential customers, who are now in their 30s and 40s leading development firms all across the country? And we said, you know, both of us listen to podcasts. Let’s just do it, let’s figure it out. So, we basically came up with our plan, what we wanted to do. We dug into our virtual Rolodexes of friends in the city, and the thesis that we wanted to bring was, let’s talk to a new generation of developers and the ones that you don’t see on the cover of the Real Deal, the ones that you don’t see on every single industry panel, though, and you know exactly what I’m talking about, all of those people. So that’s what we started with. And I think we really kind of struck a chord with people. We got some really great guests on. So, Vishaan Chakrabarti from Practice for PAU, great, great architecture design studio. Marion Gilmartin, Melissa Birch. A whole set of people that are really amazing. So our 75th episode we recorded yesterday with Keith Rand from Mill Creek Residential. So yeah, that’s basically the path.

Eve: [00:22:23] And what have they told you? What have you discovered in these interviews?

Atif: [00:22:27] So in each of these interviews we wanted to get to the heart of it is, the why of what they actually were solving for it. What was it that drove them to develop this building or design this building? And what is it that a listener can take away from them to understand what is the future of our industry going to look like? Generally speaking, that was season one and two and then three focused much more tightly on housing in the greater New York City area. And we included, started including a journalistic style monologue in the beginning that talked about a certain issue in great depth. So one of the ones that I thought was really fascinating was where did the modern system of home mortgages come from? Like, how did that even start? So, we kind of go all the way back to FDR, the 1940s, and describe that process on the way back. So that’s what made this season a little bit more unique than the other ones.

Eve: [00:23:26] Interesting. But what have you learned about developers, this next generation?

Atif: [00:23:30] Do you know? What I would say is this, as that as easy as it is to stereotype our whole industry as being in it for the money, which is usually what people yell at me when, I’m a city planning commissioner in Hoboken as well, so that’s usually what people in the audience will yell. They just yell indiscriminately aloud from the audience. And a couple times I’ve also done like the so tell who are these developers you’re talking about? But I think what, so what I’ve learned is that there are many people that aren’t that and there’s many people that care about the place that they develop. And there’s many people that care about the people that are going to live in, work in or enjoy the buildings that they’re creating. And that’s something that is deeply inspiring because I think the other description or stereotype of our industry tends to dominate the public psyche.

Eve: [00:24:22] I think that’s true. And then what about architects, this next generation of architects? How is the industry changing? Is it changing? Because, you know, architects are very undervalued on the whole. And I’m, I’ve puzzled for years over why that isn’t more actively addressed because I think they bring enormous value. But I’m not the norm in that thinking, right?

Atif: [00:24:51] Yeah, I think that it probably comes to something that my therapist would say, which is about boundaries. And I think that architects are terrible at creating boundaries in terms of what they will do versus what they won’t do and how they value themselves versus what they will give away for free with the hope of being able to get something else. And I think perhaps an old school way of thinking about this is what H.H. Richardson said, which is that he’ll design anything from a cathedral to a chicken coop. And I think the new-age version of this is where an architect’s values overlay with what they will actually do. So, for example, Vishaan Chakrabarti, the architect that I mentioned, makes it explicit in the manifesto for his business, he will not work for authoritarian regimes. He will not design a prison. So, and he is not interested in doing stuff related to law enforcement. So, I think that all of those areas and declarations are the beginnings of this boundaries of saying that this is me, this is what I do, I am valuable. And if you choose to value me, this is the price associated with it. And if not, somebody else will. That’s the tough one.

Eve: [00:26:08] I really admire that. But I’m thinking of value in a much broader sense. Like, I walk around my neighborhood or where I have my little cottage and I’m just appalled when I see the buildings that are going up in a place that has such distinct character. And the buildings are thrown up by builders who have never been trained to recognize that character or replicate it or build anything that fits into it. And architects are not even a thought. They’re just not a part of the conversation. And so, we end up with really wonderful places being just ruined over time by either an unwillingness to think about what it means to put up a building and the space it creates. And I am, I’m appalled when I talk to people about this who don’t know what architects do saying, but they’re so expensive why would I why would I need one? The builder can do that for me. I’m just puzzled at why the architecture industry hasn’t been able to find a way to talk about its value broadly.

Atif: [00:27:20] Yeah, I think that there is this element of, um…

Eve: [00:27:25] Elitism.

Atif: [00:27:26] Elitism. I think this idea that you poor people don’t deserve nice things and architects don’t work for poor people. And I think the, what I think about is also the minimization of our trade by the increasing presence of legality and fear of lawsuits throughout every aspect of our industry. So, I think the AIA has done a wonderful thing by codifying contracts that our industry uses as our norm for both owners, architects and contractors.

Eve: [00:27:57] And builders.

Atif: [00:27:58] And builders. Yeah. And I’ve read those contracts as a principle. Like I’ve needed to read all of those contracts when I’m hiring a contractor, I’m like, gosh, architects, we’ve really backed ourselves into a corner. And when I think about, let’s go all the way back to one of the greatest, still one of the greatest buildings of all time is the Taj Mahal. So, the head architect, his name is, was, Sir Ustad Ahmad Lahori. So funny side story, he’s essentially a Pakistani that designed in India, which is a whole other side story. But the amazing thing is that, um, as an architect, it wasn’t like he just drew the drawings and was like, okay, you do it and if you have a problem, I’ll probably sue you. Or if you want to sue me, let’s go to court. His whole responsibility was everything, including the supply chain. And what I found so amazing is he was responsible for the team of people that were getting all the precious stones and all the precious materials like Jade from China, Tourmaline from the Middle East, all of these different things. And they all spoke all these different languages. And he was responsible for all of that. And I think that owning of the whole process is what allows architects to truly be maximized in their value in the way that you’re describing.

Eve: [00:29:11] Yes, but I still puzzle over how that’s ever going to be brought into, you know, everyday lives because streets, neighborhoods, blocks are ruined by poor design, and then we all get to enjoy that.

Atif: [00:29:28] I mean, there’s some avenues. Let’s think, so, I mean, it’s not like us having to turn the clock all the way back to the, I guess that would be the 1400s when the Taj was built. Maybe I’m off by a century two, something like that. But I mean the idea is citizen commission. So, I think participatory democracy in some ways is a very good thing. And I think having planning commissions and zoning commissions and historic commissions can have positive benefit there. I think perhaps another one that’s not a fully baked idea, but the idea of perhaps making real estate more accessible from an investment perspective, I think there’s a really beautiful thought process around that. And then I would say…

Eve: [00:30:07] You mean like we’re doing at Small Change?

Atif: [00:30:09] Exactly! Yes.

Eve: [00:30:11] Oh, yeah. That’s how you build wealth, right?

Atif: [00:30:14] Completely, and I think that there should be, the way that the SEC thinks about and regulates funds at a larger level, I think being able to think through and structure and support the great work that Small Change is doing and people that are looking to invest at the smaller scale sounds like that’s something that’s worth effort from a legislation perspective and maybe even a funding perspective rather than huge amounts of money thrown at infrastructure to the tune of billions of dollars through the last two major bills and the Biden administration.

Eve: [00:30:44] So what was your favorite interview ever, and why?

Atif: [00:30:50] Okay, so my favorite one ever, and I love all my babies, all my babies are wonderful, all my episodes. But my one that I think of in particular is the episode I did with Louis Schump, who’s a creative director at Gensler, on the subject of the West Side Pavilion, which is Google’s new headquarters in Los Angeles. And it’s essentially, it’s a conversion of the mall that was featured in Clueless, the movie, into a mixed-use office complex. And as part of that, we talked a lot about the goals of Google and the, I guess you could say, the largesse of a large company like that to be able to promote good urbanism at a large scale. And then one area that we explored is just reeling it back. How did America get so many malls to begin with? So, both of us are amateur historians.

Eve: [00:31:45] And what are we going to do with them now? Right?

Atif: [00:31:49] I have an aunt, a great aunt, who is from Toronto that I’ll see in a couple of weeks. And every time I see her, she has the most creative ideas of what to do with, she’s not even in real estate industry, but she’s the most creative ideas and the one that she said nearly like a decade ago, far before the pandemic, she was like, hey Atif, basically what I do every day is I drive to the mall and all the other Indian aunties, we just walk around the mall together. And then sometimes we have to go to other places to pick up our grandkids and we go to other places to drop them off and then we come back. Wouldn’t it be great if there was like the mall just became my house and then the day care was there too, and then my son and daughter just lived nearby. Like, wouldn’t it be cool? And I’m like, oh my God, you hit on it right there, that’s it. That is what, that’s what malls should be. Multi-generational housing.

Eve: [00:32:37] If you want to live in that environment, that is. Because I’m not sure I could do it. Okay. So, one final question. Unless you have another company you want to explain to me?

Atif: [00:32:52] Any other companies, I would say no, I’m good for now. We’ll stay a three.

Eve: [00:32:56] You’re good for now, okay. So, one more question and that’s what’s next for you?

Atif: [00:33:02] Good question. So, we’re, for Commonplace, we’re coming up to a fundraising milestone. So, we’re excited about that. And we hope that that will allow us to expand our product offerings, our vision, our scale and bring on some more great talent to help us do that. And I think that there’s a couple other ideas I have in the works in my head. One of them is the investment portfolio that I have and scaling that perhaps to a much larger scale, allowing folks to be able to invest in workforce and affordable housing more easily on an individual level. That’s probably something a bit separate. And then the one that I love, which I feel like this is this could be the final one that I ever do, I call it, lovingly, it’s the wedding planner for high end home renovations. So, I literally, every month or so at least some family members, some neighbor, some friend from college is like, oh, P.S. I just bought a $5 million brownstone in Brooklyn. Can you just do, like the whole renovation? Because I know you did such a good job on it with your parents’ house. And I’m like, there has to be a business here. And that would be so much fun to do.

Eve: [00:34:17] So, you’re not even sure what’s next for you?

Atif: [00:34:22] One of all of them is the potential next one, so we’ll figure it out.

Eve: [00:34:26] Well, it’s been a pleasure talking to you. You’re such a high energy person. I can’t wait to see what you do next.

Atif: [00:34:31] Thank you so much for the opportunity, Eve. I love your podcast. I love everything that you’re doing and I’m so looking forward to seeing you again at our next Small Scale Developer Forum in just a couple of months.

Eve: [00:34:43] Can’t wait, in the beautiful Savannah, right? Okay.

Eve: [00:34:53] I hope you enjoyed today’s guest and our deep dive. You can find out more about this episode or others you might have missed on the show notes page at RethinkRealEstateforGood.co. There’s lots to listen to there. Please support this podcast and all the great work my guests do by sharing it with others, posting about it on social media, or leaving a rating and a review. To catch all the latest from me, you can follow me on LinkedIn. Even better, if you’re ready to dabble in some impact investing, head on over to smallchange.co where I spend most of my time. A special thanks to David Allardice for his excellent editing of this podcast and original music. And a big thanks to you for spending your time with me today. We’ll talk again soon. But for now, this is Eve Picker signing off to go make some change.

Image courtesy of Atif Qadir

Waste to Energy.

Samuel Alemayehu is an experienced global serial entrepreneur and active angel investor. His work in the
past two decades has been guided with an obsession to empower the individual and sustain the village.
His current focus is running Frontier Resilient Capital (FRC) to incubate or invest in companies who are
developing or commercializing breakthrough technologies that empower the individual (personalized
web) and sustain the village (biomanufacturing, renewable energy, carbon capture and circular
economy).

Sam started his career in Silicon Valley as a serial entrepreneur launching two companies from his college dorm room. He first got introduced to venture capital at Venrock Associates, where he focused on consumer media investments. He then moved to Africa, founding and investing in numerous companies across the continent and in a range of industries through Cambridge Investment Group and most recently FRC. Sam incubated 4AFRI at Venrock before growing the platform in 12 African countries with over 25m customers. He then built a mobile gaming platform, LotoPhone, in 18 countries with millions of customers before exiting the startup in 2013. He also created Sen Sante in partnership with leading investment banks to help develop large health infrastructures in Africa with a mobile based universal health insurance. Sam created mobile solutions aimed at empowering the individual.

Over the next decade Sam incubated Cambridge Industries Ltd, East Africa Electric Ltd, and Contingent Technologies Inc. to accelerate the implementation of pioneering infrastructure projects in emerging cities. He set up the first locally manufactured wind study program in over two dozen sites throughout East Africa. He oversaw the planning, design and construction of the first municipal waste-to-energy facility in Africa, located in Addis Ababa, Ethiopia, as part of a pan-African sustainability city park project to industrialize the circular economy with the initial facility built at a cost of USD120m. The full project has created over 20,000 jobs and aims to employ over 250,000 before the end of 2030 in ten cities. Each facility is designed as a multi-purpose plant with numerous functions, including metal recycling, brick production, industrial steam, producing biodegradable plastic, and modern insect farming. Sam has recently invested in commercializing breakthrough technologies through projects in Uganda, Kenya, Cameroon, Nigeria, Ghana, Senegal, DRC, Somaliland, Djibouti, Botswana, Angola, Namibia, and South Africa.

Sam is an active angel investor globally and sits on the board of numerous companies as an investor. He also sits on three non-profit boards: the Ron Brown Scholars Program, KID Museum, and VC Include. Sam is a founding partner at Pitch and Flow, an innovative storytelling platform that uses the global appeal and power of hip-hop to showcase and celebrate the next generation of entrepreneurs. He is a graduate of Stanford University School of Engineering and a World Economic Forum Young Global Leader.

Read the podcast transcript here

Eve: [00:00:14] Hi there. Thanks for joining me on Rethink Real Estate. For Good. I’m Eve Picker and I’m on a mission to make real estate work for everyone. I love real estate. Real estate makes places good or bad, rich or poor, beautiful or not. In this show, I’m interviewing the disruptors, those creative thinkers and doers that are shrugging off the status quo in order to build better for everyone. 

Eve: [00:00:54] Today I’m talking with Samuel Alemayehu, born in Ethiopia and educated in the US, Samuel is a serial entrepreneur and investor focused on deploying technology as an equalizing force. “Let’s change the world to technology and products that empower the individual and sustain the village” says Samuel. Through his work with Cambridge Industries, Samuel is revolutionizing the way we think about sustainable energy and infrastructure. He built the first waste to energy plant customized for sub-Saharan Africa in Ethiopia, the Reppie Waste to Energy project. The project takes 80% of the city’s garbage and turns it into 25% of its electricity. Samuel has boundless energy and a lot to tell. So, listen in. 

Eve: [00:01:53] If you’d like to join me in my quest to rethink real estate, there are two simple things you can do. Share this podcast and go to RethinkRealEstateforGood.co where you can subscribe to be the first to hear about my podcasts, blog posts, and other goodies. 

Eve: [00:02:24] Hello, Samuel. Thanks so much for joining me today. 

Samuel Alemayehu: [00:02:28] Thank you for having me. Excited to be here. 

Eve: [00:02:30] Very excited. So, you have said “let’s change the world through technology and products that empower the individual and sustain the village”. And I’m just wondering how you’re tackling that? 

Sam: [00:02:44] Exactly. So that has been our mantra as long as I remember. And whenever you’re building any kind of product and services, it has to focus on the individual, kind of be usable. Does it improve our life? And most importantly, does it improve the community that we live in sustaining our village? And at the end of the day, this is a global village and we’re doing it one waste trash at a time and starting in emerging markets. And we have evolved to do many things right now. Um, but our focus has been how can we take something that has been a headache, a nuisance and convert it into a treasure, convert it into something of value and do it in a way that really addresses water treatment, sanitation, and most importantly, a vibrant circular economy in every city. 

Eve: [00:03:42] So this you’re referring to the Reppie waste to energy plant, I think first and foremost, right? 

Sam: [00:03:48] That’s the first facility we’ve done. 

Eve: [00:03:50] And that was, where is that located? 

Sam: [00:03:53] That is located in Addis Ababa, Ethiopia. 

Eve: [00:03:56] And that’s where you were born, right? 

Sam: [00:03:59] I was born and raised there, and I left when I was 14. 

Eve: [00:04:02] So what goes around comes around, I think. So, tell me tell me why. Why did you start this waste to energy plant? 

Sam: [00:04:12] So, a lot of people start projects or entrepreneurial endeavors for something they love. A labor of love. For me, it was a labor of hate. Hated the garbage in Addis Ababa. I, it’s just, it’s everywhere. Um, you know, you would think if you live in a wealthy neighborhood, it’s collected and taken out, out of sight, out of mind. But no, not for me. Not where I grew up. Like I remembered the garbage was everywhere. We picked around, it really annoyed you. And even in the area where it’s being dumped, it used to be the outskirts, but it’s smack in the center. It is not a modern, even, you know, landfill site, but it is something where we’re digging the ground and throwing this garbage. And it’s in a country that imports metal, that imports plastic, and we’re not recycling it, we’re not reusing it. And we’re not trying to come up with a way, want to address the health impact, the direct sanitation impact of the garbage, but also when this could be an opportunity to create something of value. And I, you know, I left Ethiopia when I was 14, did my high school in the D.C. area and then went to Stanford and then was a software engineer, did a bunch of different companies around software. So, when I came back to Ethiopia, I was like, okay, we need to do something about this and it needs to happen, and started working with those that have addressed it in Europe. But we wanted to create something unique for Africa because the waste was unique, the challenge was unique, the community was unique. 

Eve: [00:05:54] So how does the plant work? 

Sam: [00:05:58] So the first facility, because the overall concept is how do you build a facility that takes in garbage and creates value? That’s a purpose. And have minimal garbage out of it as possible? The very first facility that we built in Ethiopia, does combustion, but with a flue gas treatment, the same flue gas treatment that allows you to capture the nasty gases that would come out from burning it, because that allows you to reduce the significant amount of the waste and capture those gas through flue gas treatment as per the EU standard that allows you to be located within 100-meter radius of residential areas all over the EU. So that’s the standard that we followed. Then over time, when we’ve been implementing other projects, we started to add, hold on, for the food waste, how can we separate the food waste and what is the optimum value we could get out of food waste? And that was doing insect farming and that is taking the food waste, separating it and feeding it to black soldier flies that grow 230 times their weight within ten days. 

Eve: [00:07:06] Whoa.  

Sam: [00:07:07] And making that into chicken feed and fish feed and organic fertilizers. 

Eve: [00:07:12] Whoa. 

Sam: [00:07:13] So it becomes really, really incredible value-add. And then for the waste and then we say, ooh, what about the plastic waste? How can we separate plastic waste and recycle it in the most exciting way possible? So, we started working with scientists around the world that have been using new type of enzymes that break down the plastic, and that allows you to filter it and separate them. And then you say, what about once it has gone through the system? And if you are to use combustion and you’ve burned it, the ash that comes out, we could turn the ash into bricks. What about the metal that is in there? We use super magnets to separate out the metal. This facility in Addis right now alone is separating 3.8 million kilograms of metal every single year. 

Eve: [00:08:02] Wow! So, this plant does a lot more than one thing. 

Sam: [00:08:08] It does a lot of things within one facility. It is how do you take garbage, but how do you turn it into value? And one of those values is electricity. So, it is able to generate 185,000,000 kilowatt hours of electricity, which is the equivalent of about 20% of the household energy generated in a city of 5 million people. 

Eve: [00:08:31] Wow. 

Sam: [00:08:33] And then you have other byproducts, be it making interlocking bricks, recycling plastic, being able to create food waste and converting that into chicken feed, fish feed and other. So, currently, we’re in the process of building a new facility in Kinshasa, which is a city of 18 million people. It’s actually the largest French-speaking city in the world, double the size of Paris. 

Eve: [00:09:01] Wow. All these things I didn’t know. 

Sam: [00:09:05] You never know. And Kinshasa is this vibrant place. But we’re not using incineration and with the flue gas treatment, but instead, it’s fully entirely set up with what’s called anaerobic digesters. And we’re able to capture the gas and use the gas for energy generation as well as to replace household charcoal usage. 

Eve: [00:09:26] So what’s the… It’s a lot. So, what’s the long-term plan? I mean, how many plants, how much garbage are you tackling? I mean, how much more is there to tackle in Ethiopia? Are you seeing cleaner streets? I have lots of questions. 

Sam: [00:09:42] We are. We have seen cleaner streets, one, in the program that we implemented in order to collect garbage better. But most importantly, the challenge has always been disposal. So, our core goal is to continuously evolve and change with advances in technology so that, how can we create the maximum value from the resource? To us, the waste is not garbage or a waste. We like to call it feedstock. So, to us it’s a raw material that comes in and we say, how can we maximize the highest amount of value from this garbage and, or from this waste, from this feedstock? And the goal is to be left with almost no waste whatsoever. Right now, we still send about 2% of the garbage back into landfills, but everything else gets to be used to different values, but within one central facility. So, in Addis, it’s a city of 5 million people, it’s processes 500,000,000kg of garbage a year. And that’s the only facility we want to add other additional facilities next to it.  

Sam: [00:10:52] We partner with others as well. And it is a facility that we’ve built in partnership with the Ethiopian government. In Kinshasa, we’re fully owning the facility and we will be processing 3,000,000,000kg of garbage a year and really creating over 35,000 jobs in collection as well as disposal and, and other projects. But there are other cities, so we have feasibility studies in Gabon. We’re also working in places like Guatemala, Honduras, Nicaragua are the three places that we’re exploring in Latin America. We have a partner we’re working with in Bangladesh. We think the technology that we’ve put together, the system and it’s allowing even other innovators and entrepreneurs to plug in, into our existing infrastructure because we have the waste, if they come up with a better way to deal with, let’s say, battery waste or another type of waste, they could easily plug into our platform and be able to service and provide a circular economy solution. 

Eve: [00:11:57] So any plan for the US? 

Sam: [00:12:01] Uh, Eve, that is a good and interesting question. We do think we have come up with even better solution that could work for the US. But the US is tough. The US, because it really is bureaucratic. You have two companies that totally dominate anything that has to do, to be done with waste. That is Waste Management and Republica. If they want it done, it will be done. If they want to block it, they will block. 

Eve: [00:12:28] And if they want to hike up prices, they hike up prices. I bet they do that. Yeah. 

Sam: [00:12:32] Look at their stock! Their stock, for the past 20 years, they’ve performed better than many companies. 

Eve: [00:12:38] Oh, yes. 

Sam: [00:12:40] It’s a multi-billion-dollar enterprise.  

Eve: [00:12:40] I fired them on my little buildings because it was so expensive. It was outrageous. And… 

Sam: [00:12:47] I mean, one of the challenges there is the US is on track to have landfill that is the size of the state of Rhode Island. Throughout the US. And this is land we’re never going to get back. This is land where, you know, it’s just continuing. And they talk about, oh, we have landed the right way or the different… But this is a permanently wasted land. If you want to re-mine it, it is really challenging. But instead of coming up with newer solutions, they’re continuously rebuilding more landfill. But all is not lost. There are some companies that are doing some exciting projects, specifically around anaerobic digesters and the recycling of plastic waste. 

Eve: [00:13:32] I’m actually, I’m a little shocked to hear that, you know, that the management of waste is actually controlled by two companies in the US. 

Sam: [00:13:42] A supermajority of it. That’s correct. 

Eve: [00:13:45] That’s kind of crazy. 

Sam: [00:13:47] Well, a lot of things in the US are either a monopoly or a quadropoly. I mean, be it… 

Eve: [00:13:53] That’s a monopoly, isn’t it? That’s… 

Sam: [00:13:56] Yeah, that’s a duopoly. You know, and you look at grain supply. You have four companies, the ABCDs, you know, Archer Daniels, Cargill, and a few others that dominate, like there’s various sectors. 

Eve: [00:14:14] But if you were to go to a particular region or a city and say, we want to try this in your city, could those monopolies stop you? 

Sam: [00:14:28] If, because it’s long-term contracts. So, when it comes to the waste collection, they have a long-term contract. 

Eve: [00:14:36] I know, I fought with them about that. That’s actually why I fired them because I refused to sign long term contracts. Interesting. 

Sam: [00:14:44] There are places where the cities, because it’s regional, you don’t need something that needs to be done fully. Vermont, New Hampshire. California has put in requirements. So, EU does a lot of innovative work because regions make a requirement saying you cannot throw to a landfill, or the amount of money we give you is not going to be as much. Like if you pay less, it will actually will lead to more innovation. Because if they pay them enough, they can just throw it in there and they don’t have to worry about monetizing it in order to be competitive. In Ethiopia, we have to come up with all these monetization schemes because we are not making that much money. Like they would make about $100 per ton of waste, on average, it really does vary in different places. So, they don’t have to worry about it, but we do because we make less than $2 per ton of waste. So, we have to come up with as many ways as possible to generate revenue from the waste, and that is recycling it, that is putting it through a circular system. 

Eve: [00:15:44] That’s innovation, right? You get complacent when you make too much money. 

Sam: [00:15:49] Necessity is the mother of innovation. 

Eve: [00:15:51] Yes, I know. That’s exactly right. The city that, what city is this first plant in? 

Sam: [00:16:00] The one that we’ve done is in Addis Ababa, Ethiopia. Okay. 

Eve: [00:16:03] So what do the people who live there think? 

Sam: [00:16:07] That’s a good question. So, as the main facility, we do have great support because one of the things, Eve, is building the very first facility of its kind in Africa. I have as much challenges, I don’t think we have enough time on the podcast of the challenges that we have faced as implementing projects. 

Eve: [00:16:26] I’d love to hear about them. 

Sam: [00:16:28] But a lot of it is artificial challenges, as bureaucracies and when governments change, you know, they make it very, very, very tough. But what it has done is it has been able to remove garbage from just piling up in landfills. Landfills take a large amount of land, usually for a city of this size, it would be around 200 hectares every 20 years, every 25 years that you have to dedicate for that. And it needs to be within close proximity of the city or it’s going to cost you quite a lot to transport that garbage. So, with the city, we have gotten incredible support, but when bureaucratic changes happen, we have to continuously provide support and program for the community. So, those are some of the challenges that we’ve faced, is bureaucracy and government changing rules on you. But right now, it is going in the right direction. We’ve gotten a whole lot of support because at the end of the day it is providing much needed electricity, significant amount of job creation, but also turning something that was, you know, a problem into a significant amount of a solution and a treasure. 

Eve: [00:17:47] How many jobs have you created? 

Sam: [00:17:50] So when it comes to waste collection, in a distributed way, it’s 11,000 jobs have been created in Addis Ababa. 11,000. And then with the waste disposal system and the ancillary works, it’s about 850 jobs. 

Eve: [00:18:05] That’s quite a lot. So how quickly do you think, you know, the others that are in planning will emerge? 

Sam: [00:18:13] We do see half of those facilities up and running. 

Eve: [00:18:17] Okay. This is amazing. I’m sort of stumped for asking questions. So, what were some of the most unusual challenges that you’ve had? So, we all know about bureaucracy and you know that rules changing. 

Sam: [00:18:31] Let me give you a couple. One was initially. So, when we started operating the facility, a lot of the waste collection that was done, we implemented a per kilogram. That’s the international standard for waste collectors. And what we realized was as soon as we implemented that system, initially it was used to be just a monthly fee. A lot of the waste collectors would fill up the weight, so the weight all of a sudden increased. Oh, and it was a bit suspicious. And within a week we had to shut down the facility because half of the waste that we’re collecting was rock and dirt that have been dug up on the ground. 

Eve: [00:19:11] So those are all the entrepreneurs out there being entrepreneurial. 

Sam: [00:19:15] You do the incentive this way. So, we had to bring them back in and create a different set of incentives that really aligned with all of us and that had a trust-based system and a support system. So that was one of them that happened with waste collection. And another one that you face is there’s a lot of misconception around waste to energy. So, the typical incinerator of the past is not good for the environment at all because anybody could start a fire. Burning waste by itself is the worst thing you could do to the waste. But a modern flue gas treatment, the flue gas treatment alone costs us about $40 million of capex. And you see them all over Europe. There are over 400 of these facilities in Europe. In Denmark, over 95% of all the waste is processed through these facilities. But what they do with the flue gas treatment is a modern facility that is able to capture what would have been emitted and convert it. And so, educating that part was quite important. But the more work that we continue to do, we even found more innovative solutions that were way more superior, both financially and environmentally, to even the combustion process that even Europe uses right now. Which is being able to separate the waste as much as possible, using enzymes to break down those wastes to their individual values, to include projects like insect farming. That allowed us to really maximize the value of every single bit of that waste. And so those were some of the innovative projects that came out from the challenge of this legacy brand that incineration had addressing that, but also really growing away from it because of a lot of the innovations that are out there. 

Eve: [00:21:18] So when you separate out the trash, how do you do that? And I’m asking because I interviewed someone in Norway who had created these robot waste pickers that were just fascinating for large objects and small ones. 

Sam: [00:21:35] So, we use humans and kind of separation systems because we need to employ. You could use robots, we have systems, we can employ robots as well. But in Africa we need as much of the jobs as we could get. We provide safe environments and usually we do it three ways. One is to separate them at source as much as possible. Two, once they have arrived on site conveyor belts and to be able to separate them. The first facility that we did is bulk, so we didn’t need to do the separation and the separation is done using super magnets or other parts at the end, but earlier is using as much of human power as possible. But when it comes to, for example, metal, we use super magnets. For non-ferrous metals we use eddy current technologies. With plastic, once we have plastic waste, we actually have, you’ll like this. So global plastic recycling in the world is abysmal. It’s 8/10% maximum. A lot of the waste makes it to landfills and waste disposal sites. The reason that Europe and US have a higher calorific value, meaning its ability to generate energy is higher, is mainly because of the amount of plastic and paper that makes it to those waste to energy facilities as well as disposal facilities. A huge number. Because it doesn’t get recycled and it’s a shame that it doesn’t get recycled. It makes it to waterways as well. It’s a detriment for different things. So, what we have done is we take out plastic waste separately together and then all of the plastic, we don’t separate the plastics. We introduce an enzyme. This is a technology that was developed in University of Texas Austin and a team out of University of Nottingham. And this enzyme that they have breaks down the plastics to its individual components and then we’re able to use a specialized membranes that allow us to filter the different chemical compounds of the plastic individually, separately. And you can maximize the recycling process to up to 80/85%.  

Eve: [00:23:49] Wow.That’s a big difference. 

Sam: [00:23:51] And something, once it’s scaled, could be a game-changer. 

Eve: [00:23:54] Yes. So you must have a lot of scientists and software engineers and other people involved in this project. 

Sam: [00:24:03] We do. We work with scientists both as subject matter experts that advise us, but also in our team. We’ve also been early adopters for a lot of scientists that are working in the waste sector, because one of the advantages of emerging markets compared to Europe or US, usually is, when you want something to be adopted in the US, you go head-on into legacy companies that are usually well capitalized and very powerful. So very hard to change it. Or as a legacy infrastructure that is already a sunken cost that somebody will lose money to adopt a new technology. So there quite a lot of hesitation. But for us in an emerging market, that infrastructure hasn’t been built yet. So, when somebody comes up and say, I have the solution, it’s new. It’s like, we raise our hands quickly and say we will adopt. Can we work? So, we have been early adopters to a lot of this technologies that allows us to start working with them to even invest in them. So, when they come back into Europe, US, we’ve had an opportunity to really have a seat and be a player in a lot of these emerging technologies. 

Eve: [00:25:17] It’s really fascinating. It makes me want to go to Africa. 

Sam: [00:25:21] You’re welcome. We would love to host you. 

Eve: [00:25:25] So, yeah, it’s very difficult when you’re up against a system, right? And you’ve probably seen that in your other work as a VC because, you know, I’m the 1.9% that you would invest in, a female, right? And then if I were black, I’d be the 1%, right? And that’s just, you know, that’s a system that’s very difficult to break through to. There’s so many of them. 

Sam: [00:25:52] Oh, absolutely. Yeah. 

Eve: [00:25:54] And zoning, like in my world, in real estate, you know, zoning has really shaped the physical landscape in the US and not always, sometimes in a good way, sometimes in a very bad way. Right now, it’s a detriment to really building new affordable housing quickly. But breaking through it, there’s so many layers, there’s so much to go up against so I totally get it. But you’ve also been, you’re also part of something called the Power Africa Initiative, which was set forth by the Obama administration to work on large-scale wind farms in Africa. Can you tell us about that? 

Sam: [00:26:30] Yeah, so the Power Africa Initiative was something, as you said, that the Obama administration spearheaded, and it’s to support and assist renewable energy adoption throughout the continent of Africa. So, our collaboration with them is in the support of wind farms in a place called Aysha, and different parts of Ethiopia. But we’ve also worked with them in putting up wind mass to select and identify the best wind locations. So wind is one of those renewable energy technologies where location matters, just like real estate, location, location, location. And if you have the right type of location, the investment return on it, as well as its impact, its ability to generate electricity, you can go to a site where it’s generating maybe 15% of the time effectively, or you could have some of the sites that we’ve worked with in Aysha and another site called Lake Turkana in Kenya, on the border of Kenya and Ethiopia, they have plant factors as much as 65 to 70%. 

Eve: [00:27:38] Interesting. 

Sam: [00:27:38] That means for the same one wind farm that you have in there, it is operating and generating electricity at full capacity for 65% of the time. 

Eve: [00:27:48] That’s amazing.  

Sam: [00:27:50] That’s a significant amount of return. So, it’s identifying those sites where what we’ve worked on and what we have realized is, you know, especially with climate change and climate adaption, it has to be incorporated with where humans are located. Where are the load zones, how can we get them, how can we help them with energy transition? How can we use waste problem as a means of addressing the environment problem? Because one of the things is, you know, the same way you could emit a significant amount of carbon dioxide through gas fired power plants or, you know, diesel fired power plants, you also generate a significant amount of greenhouse gases in a landfill. Landfills around the world are responsible for that. So, the way we looked at it was energy transition, circular economy, they’re all very similar in addressing climate change. And if you are to do it where the development is happening, so that when energy, when new housing is built, you plug in. Hey, it needs to have a waste solution. If you have a good waste solution, if you have a reliable energy source, then the quality of living in those new housing projects becomes very attractive. So, we work with developers very closely to make sure that we are their partners, both for recycling and circular economy waste management as well as renewable energy supply. 

Eve: [00:29:17] I was going to ask you how could your model be improved? But it sounds to me like you’re thinking about that every moment. 

Sam: [00:29:24] No, because you can always improve. You know, Eve, the one thing that just heartens me right now, given all of the challenges that are out there, is advances in science and technology. Everybody’s talking about AI, ChatGPT, but what AI has done to plastic recycling, to the way we’ve been able to create a lot of these enzymes is because of AI. The ability to simulate the right type of wind locations, steady multiple sites at the same time. So, a lot of technological advances have made it very, very attractive to start addressing things. So, what we do is, we always have our ears, so as you alluded, my day job now, I’m still on the board and a majority owner of Cambridge, is in a new VC fund called C1 Ventures. Our work is, how do you continuously find, identify and collaborate with entrepreneurs and scientists that come from different environments? Because a lot of solutions, as you said, women get less than 2% of the global VC funding, minorities because… But at the end of the day, female entrepreneurs have performed better than any other entrepreneur out there. But if we want to find a solution, so how do we use the technologies? How do we bring individuals from different fields and put them in the right location, connect them with implementation projects, connect them with the right services? And if you could do that, innovative solutions are going to come up. Some of them, they use technology, some of them they’re going to innovate socially, business model innovation. But you need the diversity of thoughts. You need the diversity of experience. 

Eve: [00:31:14] Yeah, I agree. So, tell me what’s going on with real estate in Africa? 

Sam: [00:31:20] I am glad you asked that. Let me give you two stats to just show how real estate is extremely important in Africa and very dynamic. One is, for the next 15 years, the top ten fastest growing cities in the world are all in Africa. 

Eve: [00:31:37] Oh, interesting.

Sam: [00:31:39] We have…  

Eve: [00:31:40] Except for Melbourne, Australia. 

Sam: [00:31:43] Well, no, as a city it doesn’t even come close. 

Eve: [00:31:46] Oh, I think it ranks, it’s really. No, I read somewhere it was the second fastest growing city in the world, so I’m not sure… 

Sam: [00:31:52] For the next 15 years – I’ll share with you the UN study. 

Eve: [00:31:55] Okay. 

Sam: [00:31:56] Exactly. And I want everybody to take a look at that. But it is, it’s incredible. 

Eve: [00:32:02] It’s exploding. 

Sam: [00:32:04] It’s a young population, but a lot of the cities have the infrastructure and the housing. So, for example, take Addis Ababa. It is, it has the infrastructure and the housing made for 500,000 people. But it’s a city of 5 million. It is growing at a much faster pace than the city was ever designed for because we’re talking about Ethiopia as a country in 1990 had a population of 42 million. Right now, we’re a population of 120 million. 

Eve: [00:32:33] Wow. 

Sam: [00:32:34] So, a much, much faster growth where infrastructure hasn’t kept up. So, there’s a huge demand for housing. And the more housing you just patch in, that is a strain on the infrastructure because the infrastructure needs to also be designed for that. So, you have an opportunity to build smart cities, to build self-sufficient communities. You’re starting to see innovative solutions that are trying to adapt local building materials instead of importing building materials or using traditionally Western building materials and steel or cement. There are modern mud houses that are incredibly beautiful and well designed for insulation, in country. You will see adoption for modular construction. You’re starting to see, and we have supported and funded a project, for example, in Nigeria, a project called Butterfly Island. 

Eve: [00:33:33] I’ve talked to him, yeah. 

Sam: [00:33:35] Yeah, a small city where they’re building really exciting communities of, a community of 100,000, a community of 50,000. But anybody that is working on modern building technologies, brand new way of building, building materials, they need to go to Africa. We have more cement factories, more building material factories being built every day. You have companies like, Brimstone Energy that have reinvented the way we make cement. So, Brimstone is, has designed, and this is a couple of scientists from Caltech, that have taken instead of having limestone, because when you want to make Portland cement, limestone is your raw material. Limestone, you heat it up, it automatically generates calcium oxide, which is what you need for, Portland cement, but also carbon dioxide. But they replaced it with calcium silicate, which is black rocks. And they’re are 200 times more abundant than limestone. But when you process calcium silicate, you’re able to produce Portland cement and silica, but in a carbon negative process. 

Eve: [00:34:46] Interesting. 

Sam: [00:34:46] We’re starting to see more of those type of cement facilities that are entirely reimagining, again, the same identical Portland cement, but reimagining the way it’s made. They will get adoption in Africa. The housing demand in Africa is high. Every government, every government that is going through an election, the one thing that they’re asked, the one thing that they keep on promising, is affordable housing, affordable housing, affordable housing. Jobs and affordable housing are the bottlenecks but they could also be an innovative linchpin for some of the most exciting business models, some of the most exciting building materials companies to come up and build housing the right way. 

Eve: [00:35:29] So, for a real estate entrepreneur like myself, I love seeing new things. I’ve never been to Africa. I’ve traveled all over the world, but not Africa. What would be the first place you’d suggest I go? I love cities. 

Sam: [00:35:41] I’m biased, of course I’d like you to go to Ethiopia first. Ethiopia, Addis Ababa and explore what Addis Ababa has done. I mean, this is an open invitation. We would love for you to also go to Kigali. They’ve done a really good job of being a welcoming environment, specifically for housing entrepreneurs. You get tax benefit, tax holidays like ten, 15 years, tax holidays. Gabon is another really exciting place, Senegal. And we could share information around, kind of, the governments that are being quite open to attract investment, to attract entrepreneurs to come and build their creative solutions. I’ll be remiss not to mention, for example, what Habitat for Humanity is doing, Jonathan’s leadership there with innovative platforms to attract and bring in building technology innovators together and accelerate them, but also collaborate with them to build. So, it’s an incredible place. Africa is very, very beautiful and welcoming, and we would love for you to come there. 

Eve: [00:36:52] Well, it’s risen to the top of my list after this conversation. 

Sam: [00:36:56] We need, yeah, we need to get you out there quickly. 

Eve: [00:37:00] So I’m going to go back to your background. You were born in Ethiopia and you emigrated to the US. I watched the little video clip when you were accepted to, I don’t know how many universities just four years after you arrived. That was pretty amazing. So, what took you from that early beginning to where you are today and the path you’ve chosen in your life? 

Sam: [00:37:24] Oh, that’s a really good question. You know, one thing I would say is, for me personally I have been the beneficiary of the generosity of strangers. I have asked for help. It’s just all of us need luck. My story would not have been possible if I had stayed just in Ethiopia. The American opportunity was incredible. But even my opportunity in the US would not have been possible if it wasn’t for individuals that are just asked and that have transformed my life. So let me give you just a couple of examples. One was, so when we came to the US, my dad used to be minister, uh, head of transportation in Ethiopia, and he was a prisoner there as well, a political prisoner and came here and was driving a taxi in DC. 

Eve: [00:38:17] Oh. 

Sam: [00:38:18] And he was also a Parliament member. From being a Parliament member and as minister to being a taxi driver. But but one thing he wanted for us is to get a good education. He was like, I’ll do my work and my mom as well. When my mom was a teacher in Ethiopia, became a parking attendant. But when he was driving his taxis one day and this was like six months after we have arrived, this was in 2000, I was 13 turning 14 in 2000. And a passenger in his taxi, a random white guy, was having a conversation with him. And and my dad was like, I want my kids to go to the best schools. He didn’t even know which one was the best schools. And this guy said oh, that’s wonderful, like, does he like engineering? And he was like, yes, yes, yes, he does. And he was like, oh, I read in my alma mater at MIT, there’s this Ethiopian kid that did his undergrad at MIT. Now he’s about to do his PhD. His name is Solomon Assefa. You should reach out to him. And my Dad writes the name, comes home to me. He’s like, you need to call this guy. So, I went to the MIT database, found his name, send him a random email saying, oh, you don’t know me, just arrived in the US but would love to go to this place called MIT. 

Sam: [00:39:31] I wasn’t even sure. And guess what? 24 hours later I get this two-page, like detailed, what became my blueprint of like, good thing. If you’re very serious, this is what you need to do. Take the most challenging classes. These are the various things that you need to do – da, da, da, da, da. Boom, printed it, put it on my wall, and that was my blueprint. And the fast forward, four years later or three and a half years later, I was fortunate enough, and there are so many others, my teachers at my high school and others I said, I want to do this, can you help me? Boom, they were there. After school. Then, became valedictorian of my school and got accepted to all of the top schools and then I reached out to him saying, you don’t remember me, but three and a half years ago, you really changed my life. You told me it was possible and that I could do it. I followed that blueprint. It worked, and I’m about to come for an admit weekend at MIT, would love to meet you. Then the guy goes oh, my God, [inaudible] I’m so glad. So, we met and we’ve been kind of really good friends ever since. And he’s… 

Eve: [00:40:40] That’s wonderful. 

Sam: [00:40:41] Yeah. My partner in our venture fund now, again, the generosity. Going out there and asking. He had, for the projects that I did when I was at Stanford. Nobel Prize winner Dagga Shroff, who won the Nobel Prize in 1992 for Superfluidity of Helium, became my partner in a project that we did where we helped kids. In East Palo Alto, learn science and technology by transforming golf carts. 

Eve: [00:41:08] Right. 

Sam [00:41:09] And so a lot of time the key thing is going out there and asking has been has been the thing for me and giving back. 

Eve: [00:41:16] Do you think that generosity is unique to America.  

Sam: [00:41:21] From strangers? No, it’s not. But America, the opportunity merged with the generosity to help. Unlocks incredible opportunities. 

Eve: [00:41:31] But speaking to you, Samuel, I’m sure they got a lot out of it, too. It wasn’t just generosity. So, but… 

Sam: [00:41:39] But for most of them, it came out with no currying favor, or looking ahead. Yes, they really wanted to help. And yes, like, we became great friends and we’ve invested together and we’ve done stuff. And, you know, a good mentorship is rewarding for the mentor as well as the mentee, the sponsor. And we all need to do that out there. But in the US, the opportunity, taking advantage of those really generous connections and supports have been very, very helpful for me. 

Eve: [00:42:14] A couple more questions. What’s the entrepreneurial space like in Africa? 

Sam [00:42:18] Again, another really good question and want to be careful in how I answer it because everybody, like a majority of Africans, are entrepreneurs by necessity. Every subsistence farmer is an entrepreneur, that owns his own little land. You go to the city, be it the shoeshine boy or others, they’re all entrepreneurs. There’s a difference between entrepreneurial by necessity, because there are a lot of them that will tell you, I won’t trade that for a steady job and for a predictable way that could support my family. But it’s built that entrepreneurial spirit. It’s about survival. Life is challenging in many parts, but there is ingenuity.  

Sam: [00:43:02] Incredible ingenuity, sadly, is not met with resources. So they are not able to scale up what they could do. But recently you’ve also seen entrepreneurial spirits flourishing in the tech sector, in the mobile sector. Where, you know, the best mobile money project came out of Africa with M-Pesa out of Kenya. You have a lot of innovative solutions from farm tech, agritech and insurance tech that are just flourishing all over the continent. And it makes the continent have a very dynamic path, and it’s entrepreneurship that will take it to the next level. But what it lacks is the resources, funding, mentorship from other businesses. There’s angel investment and risk capital from those that have done it. It’s not there as much. It’s still family and friends, and it’s very, very challenging expecting somebody to be able to do that. 

Eve: [00:44:03] Yes, it is. 

Sam: [00:44:03] Structures need to be in place, but that, it’s there. It’s the entrepreneurial and it’s a young, young continent. More than 50% of Ethiopians are under the age of 15. 

Eve: [00:44:16] That’s really interesting because, you know, necessity is the mother of invention. I grew up in Australia when it was, I think, much more entrepreneurial, now Australia has become very wealthy. It’s an amazing place, absolutely gorgeous. But I think with wealth comes complacency and less entrepreneurship. And that’s, there’s this is wonderful sort of balance, right, you’ve got to get to to keep new things happening, I think. 

Sam: [00:44:45] No, you’re absolutely right because I mean, take the US, you have places like Silicon Valley and Austin and parts of pockets of the US that have been quite entrepreneurial in the tech sector. But we need entrepreneurship everywhere. We need, and you’re right, like, it does breed complacency and we’re starting to see climate change is really putting a bit of a fire on many people. You know, scientists that would have been comfortable working in a big company are very much demanding to go out there, and they’re quitting to start their own companies. 

Sam: [00:45:29] So I think we want innovation to happen in every sector. You know, sadly a lot of Internet based or software-based innovation limits itself in a few sectors, but we want to transform the way cement is made. We want to transform the way steel is made. Agriculture has been stuck. It’s a 10,000-year-old technology. If Jesus is to come back, we still make things exactly the same way, our protein and carbohydrates. But there are better ways and we’re starting to see them and we’re starting to see this extremely unprecedented excitement to reinvent the way we do things. 

Eve: [00:46:04] So one more question for you, and I’ll leave you alone. What keeps you enjoying it? What keeps you up at night? 

Sam: [00:46:12] So, well, the main one is am I being a good dad? So, I’ve got three kids. Dad, that has been the biggest job, the biggest project I’ve ever undertaken. 

Eve: [00:46:23] It’s A very big job, yeah. 

Sam: [00:46:24] That keeps me up at night. The other one is, you know, I kind of, I’ve been extremely fortunate in my life to have traveled a lot to really call the US and Africa and even parts of Europe, my home and at the end of the day, we are a global citizen. But at the end of the day, a lot of innovations and advances, there’s a lot of waste in certain places, but shortage in many other places and there’s this disconnect and you feel hopeless. It’s like, how do we connect it? Because it’s just even food production there’s excess here in the US and Europe and there’s shortage in many parts of the world, but there’s enough that is already being made. 

Sam: [00:47:11] How do we create that equality and equitable sharing and innovation and growing together, but connecting and shrinking our village to this global village of the human tribe. It’s something that we all, you know, aspire to see. Sometimes you get, you’re very proud that things are going in the right direction, and at times you’re really depressed because we’re really separating even further. 

Eve: [00:47:39] Yeah, it’s not really a global economy yet, is it? No. Well, this has been absolutely delightful. Thank you very much for joining me. I’ve thoroughly enjoyed myself. 

Sam: [00:47:48] Thanks for having me. 

Eve: [00:47:50] I can’t wait to hear more. 

Sam: [00:47:52] Absolutely. We’ll be looking forward. Thank you so much. 

Eve: [00:48:06] I hope you enjoyed today’s guest and our deep dive. You can find out more about this episode or others you might have missed on the show notes page at RethinkRealEstateforGood.co. There’s lots to listen to there. Please support this podcast and all the great work my guests do by sharing it with others, posting about it on social media, or leaving a rating and a review. To catch all the latest from me, you can follow me on LinkedIn. Even better, if you’re ready to dabble in some impact investing, head on over to smallchange.co where I spend most of my time. A special thanks to David Allardice for his excellent editing of this podcast and original music. And a big thanks to you for spending your time with me today. We’ll talk again soon. But for now, this is Eve Picker signing off to go make some change. 

Image courtesy of Samuel Alemayehu

Why transit matters.

“Public transportation is nothing new, but with modern technology, cities can create better infrastructures like never before.” Remix

City living has many advantages with cultural attractions, restaurants and nightlife topping the list. But what are those amenities worth if you can’t get to them easily? Good infrastructure is equally as important and by that, of course, we mean public transit. Public transit promotes connectivity, density and vibrancy, adding to that city vibe, not only in city centres but also in ex-urban areas. And that brings increased productivity and economic growth. And public transit reduces each person’s carbon footprint, making cities more sustainable.‌

Good public transportation should be:

  • Accessible and available to everyone.
  • Convenient with stops at the most frequented places – for locals and visitors alike.
  • Affordable for all and an attractive alternative to using a car.
  • Frequent and reliable so that riders can depend on it.
  • Flexible, providing options for riders to get where they want to go.
  • Visitor friendly, easy to understand and use.
  • App friendly so that you can pay for or track your ride easily.

Over the last few decades, rapid urbanization has propelled the construction of mass transit systems all over the world. But the United States is lagging far behind. We don’t have a great reputation when it comes to public transit. While the country is lagging, many cities are working hard on meeting the population’s needs when it comes to transit. Here are ten cities we can all learn from. Or listen to rail advocate David Peter Alan. He knows a thing or two about public transit. He’s ridden the entire Amtrak system and about 300 transit providers in the U.S. and Canada as well.

Image courtesy of John D. Norton

Next Gen recycling.

A bit of a technology ‘man for all seasons’, Harri Holopainen started his career in computer graphics on a Commodore 64. He worked on smart card payment systems, co-founded a small graphics software company, and even designed and implemented a prototype online gaming world, a subject he did his university thesis on. Upon graduating, he and his partners grew their computer graphics software company, Hybrid Graphics Oy, until NVIDIA stepped up and bought the company in 2006. Harri later struck out on his own again, as a partner at Love of Technology Strategies, and co-founder of Microtasks, a microwork company.

In 2013, Harri stepped into the world of machine learning and robotics, at ZenRobotics, a company that builds smart robots for waste sorting and recycling. Founded in 2007, they are at the cutting edge of applying AI-based (they call it “ZenBrain”) robotics to sorting all kinds of trash. Their mission is nothing less than defining Next Generation Recycling. They have two main products, a ‘fast picker’ that is aimed at traditional mixed recycling streams, and a ‘heavy picker’ that can sort construction and demolition waste materials. The latter makes up to 6900 picks per hour using multiple sensors and can be found in Scandinavia, throughout mainland Europe, China, Japan and Singapore, and even in the U.S. There is even a system running on wind power, in Sweden.

Over the last nine years, Harri has served at ZenRobotics as Robot Lab Head, Head of Technology, and now, CTO. He describes himself as a generalist, having worked on VC rounds, defined product strategies, negotiated licensing agreements with Ericsson and Nokia, headed R&D development teams, and even hand-built critical robot components. But as he notes now, “Lately I’ve also been up to my elbows in trash.”

Read the podcast transcript here

Eve Picker: [00:00:09] Hi there. Thanks for joining me on Rethink Real Estate. For Good. I’m Eve Picker and I’m on a mission to make real estate work for everyone. I love real estate. Real estate makes places good or bad, rich or poor, beautiful or not. In this show, I’m interviewing the disruptors, those creative thinkers and doers that are shrugging off the status quo, in order to build better for everyone. If you haven’t already, check out all of my podcasts at our website RethinkRealEstateForGood.co, or you can find them at your favorite podcast station. You’ll find lots worth listening to, I’m sure.

Eve: [00:00:53] Harri Holopainen has a mission. To define Next Generation recycling. A bit of a technology ‘man for all seasons’, Harri started his career in computer graphics on a Commodore 64. He moved onto smart card payment systems, co-founded a small computer graphics software company, and even designed and implemented a prototype online gaming world, a subject he did his university thesis on. But in 2013, Harry stepped into the world of machine learning and robotics at ZenRobotics, a Finnish company that built smart robots for waste sorting and recycling. And there he helped build their A.I. based ZenBrain robots, which sort all kinds of trash, first as a robot lab head and now as CTO. Harry describes himself as a generalist. He’s worked on VC rounds, defined product strategies, negotiated licensing agreements, headed R&D development teams, and even handled critical robot components. But lately, he says, “I’ve been up to my elbows in trash”. You’ll want to hear more.

Eve: [00:02:23] If you’d like to join me in my quest to rethink real estate there are two simple things you can do. Share this podcast and go to RethinkRealEstateForGood.co where you can subscribe to be the first to hear about my podcasts, blog posts and other goodies.

Eve: [00:02:55] Hi, Harri, thanks for joining me today.

Harri Holopainen: [00:02:58] Hi Eve, glad to be here.

Eve: [00:03:00] So I was really fascinated reading about your career. You did early work on a Commodore 64 and technology has defined your career. So, like everything from computer science to online gaming, I’d really love to hear about this trajectory and what the common thread is for you.

Harri: [00:03:22] Well, I think the common thread has always been in working with technologies that at some point will have an impact in everyday life and that sounded quite sort of absurd actually when we started to work with computer graphics, but then along the way came computer game consoles that started to bring home computer graphics into living rooms. And then you’ve got PCs and finally, you got mobile phones and I remember the first things, when there was a big customer asking for us that they would like to have these graphics very advanced graphics on a cell phone display that had, maybe, I don’t know, 80 times 60 black and white pixels. And we were thinking kind of like, yeah, like, what’s this is never going to go anywhere. But then again, a couple of years later, we realized that it’s the user interfaces of these mobile phones that actually will require quite sophisticated graphics. And this sort of graphics portion of my life ended in 2006. We sold the company that we founded to Nvidia, who was then and is still the number one graphics software and hardware company. And also the movie Avatar came out. And I remember seeing Avatar, and my first realisation was that, OK, so I have been in computer graphics long enough, so my work is done. Time to find something else to do.

Eve: [00:05:13] Interesting. So, you moved on to many other things and you have ended up in machine learning at ZenRobotics.

Harri: [00:05:26] Yes. And I’ve been here now for eight years, and this is, well, I would say that the primary sort of thing that comes to mind is that nobody really is against robots picking up our trash, and everybody agrees that there’s quite a lot of trahs out there and it ain’t going to recycle itself. So, it’s kind of a no brainer thing to do to apply robots there. And that’s also another kind of technology, which has been in people’s imaginations for over 100 years. But then this idea of smart robots actually doing something useful outside assembly lines, it still hasn’t quite happened. And I feel that this waste sorting is one big step towards that direction.

Eve: [00:06:24] So ZenRobotics sorts waste, all sorts of waste. And what’s your role there?

Harri: [00:06:33] My current title is CTO. The first thing that I did in the company was that I made the first prototype of the current type of robots that we currently use. Made it big for the first time. And then after that, I have been working in basically, since we are sort of a smaller company and need to move fast, so the research is very fast paced activity. So the research is the things that you think you can sell in 12 months’ time. And basically, those are the projects that I’ve been spending almost all of my time in, and it involves things like mechanisms for grouping waste and, of course, mechanisms that actually can survive in a waste plant and then also a lot of higher-level software to make the robots really earn its pay at the customer site.

Eve: [00:07:32] Let’s step back a bit. So ZenRobotics is a company that basically sorts waste using robots.

Harri: [00:07:40] Yes.

Eve: [00:07:41] And I read somewhere about the ZenBrain. What’s the ZenBrain and what are the products you’ve developed to sort waste

Harri: [00:07:52] ZenBrain is basically the collection of technologies that use a variety of sensors to look at the waste on a conveyor belt and then recognize the objects on the belt and then figure out how the robot could actually grip the objects on the belt. And then finally, the pieces of software that tell the robot to move over. So that the object from the belt actually ends up in the correct place, and the first application area was construction and demolition waste. And there are the objects can be quite large. I think we are talking about maybe 30 kilograms of maximum weight for pieces of concrete and stuff. And then the second robot that we have done is a robot designed for handling packaging and light waste. And the difference there is that that robot is much faster. But of course, it doesn’t need to lift 30 kilos because most of the things that it picks are things like hamburger cartons and plastic bottles and things like that.

Eve: [00:09:09] So they have different brains. So, what’s the problem that Zen Robotics is trying to solve? Why was the company launched?

Harri: [00:09:17] The company was founded by two old friends of mine and then some waste sorting experts. And the first slogan for the company was that’s basically “let’s do something cool with robots and A.I.” And then they try to figure out what that might be. And they actually did quite a lot of, sort of, small-time projects. I think there was discussions about going to fisheries and make a robot that picks up the dead fish from those containers before they make all the other fish sick. And that’s an interesting challenge in gripping that fish. And then there was another project done for a nuclear power company where the challenge was to, Recycling of these fuel rods that was apparently required some, some high level A.I. So then, at one point my friend, who has often trouble getting sleep in the evening, he was basically just at his home watching TV and there was Discovery Channel on showing images about these staggering piles of waste that’s, that you can find in all around the world. And then he realized that how about applying A.I. to make a robot that actually can sort waste? And it sounded very easy because, of course, you have these industrial robots, and they are not really that expensive. So that’s problem solved. And then there’s already, back then there was equipment that was used to identify materials on a conveyor belt. So, just put those two things together and we will have a robot that sorts trash. And it didn’t turn out quite, to be quite that simple.

Eve: [00:11:16] Simple, yeah, that’s what I was going to say. Sounds simple, but probably not.

Harri: [00:11:20] Yes.

Eve: [00:11:21] So I’m really fascinated by the whole construction industry and how this might impact it. And have you seen a change in approach to recycling materials over the years? And how readily is this being adopted in real estate projects or demolition projects or anything like that?

Harri: [00:11:42] Back when we started, the idea of using robots to sort construction and demolition waste was quite sort of novel. And when we were discussing people, then there was this category of people who were forward-looking. Back then they quickly realized that, actually, this makes a lot of sense and also so that it’s, it should be also quite profitable. And today we are in a situation where pretty much all the recycling industry agrees that robots are one important piece in this puzzle of getting circular economy work. So there’s quite a big, sort of, change in overall attitude. And of course, on the practical side, the waste industry is, first of all, it’s quite conservative. It’s not really the kind of an industry that immediately jumps into all the new things out there. And also the existing waste processing plants are quite large and expensive. So, even if today we would invent something completely sort of ground-breaking, then it would take quite a lot of time before the customers could actually employ it because these new breakthroughs, they don’t make any practical difference. If you have a 20 million, year old plant that you just built last year, and it’s incompatible with that. But now, actually this year, we have seen an opening of two new plants, one here in Helsinki. It’s about 30-40 million Euro plant, and it’s designed around robots. And most of all, the plant is designed to recycle waste so that none of it goes to landfill. And that’s quite a fantastic sort of starting point.

Eve: [00:13:43] That’s amazing. Yeah!

Harri: [00:13:45] And there’s also another plant in Switzerland that’s opened, also this year, and they are employing robots to recycle actually concrete and other inert materials. As you may know, cement industry is one of the biggest CO2 polluters. And the point of their plant is that they will take in concrete, stone and all the other inert mineral materials and then recycle it into something that can be used to make a concrete with less cement in it.

Eve: [00:14:18] Interesting.

Harri: [00:14:19] And that’s also a kind of plant and process that you can’t have without robots because there’s no other way to sort that kind of material.

Eve: [00:14:29] So what countries are at the forefront of this Next Gen recycling trend?

Harri: [00:14:35] I think that the waste industry itself is quite interesting because it’s especially, in C&D, it’s quite a regional industry and there’s a lot of regional differences. And that means that there is not that much competition globally. Because obviously, if you do C&D sorting in Finland, it would be completely unfathomable to just not be competing with companies in the US, for example, because you can’t transfer the waste itself, nor you can really transfer the end results of the recycling. And so, our customer, first customers ended up being the first adopters, essentially, all around the world, which is and has been quite challenging because we are a small company in Finland and our then first customers were, well, one of them was, well, a couple of them on in Central Europe, then one in the U.S., then I believe we have one in Australia and then one in, I think, Singapore or Japan.

Eve: [00:15:49] Oh, interesting. So, I’m Australian, you know, so that’s thumbs up for Australians. So, your company is in Finland, but when you say that customers, do they buy these robots from you? Is that what you’re selling?

Harri: [00:16:03] Yes, we sell the, basically the robots and then our customers are the companies that operate waste sorting facilities. And of course, we are in close cooperation with the companies that design these waste processing plants and processes and equipment.

Eve: [00:16:27] Ok. It’s really interesting. So, you have a fast picker and a heavy picker. And you describe, the heavy picker is really used for the construction industry, and the fast picture is for light boxes and things and like, what’s next? I mean, there must be other pickers in the, I’m a Picker too, but that’s not what we’re talking about. There must be other pickers in the works, right?

Harri: [00:16:58] At this point we have about, I think, maybe 60 arms around the world in production and we are currently scaling up. And it’s really no problem for us of identifying potential new use cases because there’s basically one new potential use case coming up every week. And there’s the, yeah, there’s like, for example, textile recycling is one big area where there are very few existing solutions. And then there’s obviously scrap metal and all that entails.

Eve: [00:17:38] Salvage yards, yeah.

Harri: [00:17:40] Yeah. And then recycling processes for cars and electronics. And there’s the recycling process for used batteries. Like practical problems like if you have a facility that recycles lead acid batteries, then it’s rather straightforward because you strip out the plastic shell and take out the lid and then basically, you’re done. And but then again, in that pile of batteries, you have a used lithium-ion battery, if you put that battery in that process, it may explode there, and that’s going to be a big problem for them. So that’s a typical kind of place where this added complexity of basically the everyday products out there will pose these interesting new challenges to companies that are already recycling things. And then there’s obviously, there’s a potentially very large amount of waste categories that are not really yet recycled at all because there is no economic way of doing it.

Harri: [00:18:51] And construction and demolition waste, there are other ways to do it than with robots. One thing to separate, for example, wood and light plastics from stones is to dunk them in water and then skim what floats. And that kind of works but of course, it makes everything wet, and soon that pool of water itself will be contaminated. And then, of course, there’s manual waste sorters are what are currently used in the quality control of municipal waste and also in construction and demolition waste and pretty much every sort of waste process where there is a significant sort of operation going on. And of course, one of our entries to the market has been that we will reduce the number of manual sorters required. Well, the possibilities are, of course, endless and unlimited. So that has never been our problem. So this picking and sorting is the easiest thing that makes a difference and has commercial value. But of course, after you have a robot that’s good at picking these things, why not use the robot to tear them apart as well?

Eve: [00:20:10] One thing that springs to mind, I saw a amazing show where a woman had an architect design a house for her and they used the wings of a decommissioned airplane for the roof, which was just fascinating, you know? But the fields of decommissioned airplanes are just crazy. I don’t know if anyone’s tackling those.

Harri: [00:20:30] Yeah, that’s also, and I would think that that entails a massive amount of manual labor. I guess a similar use case is decommissioning of ships, which I believe basically happened by, I don’t know, stranding them on a beach somewhere and having them [???]

Eve: [00:20:49] And then they just rust.

Harri: [00:20:51] Yeah. Or then there’s like 200 guys that come with, I don’t know, pliers and angle grinders and that, and put it into tiny pieces and.

Eve: [00:21:02] Interesting.

Harri: [00:21:03] Very, very manual, intensive, and very hazardous work.

Eve: [00:21:07] So I have to ask, what is the economics of this look like for someone who wants to deconstruct a building manually using a robot? Is it cheaper than sending out a crew?

Harri: [00:21:17] Well, I think if you have a building that needs to be decommissioned, then today I’m not really sure if our customers use the robots as a unique selling point, because the point of the robots for our customers is basically just to be able to give you a better price because there’s less, the operation has less cost. And of course, especially in the municipal waste, the regulatory bar is obviously rising constantly, and that obviously applies also to C&D sorting. That means that there are higher sort of regulations for the total operation of demolishing a building because you can’t demolish a building and then just dump it somewhere. So at the end of the day, that, at least it will mean that the prices of putting stuff in landfill, they are quite steeply rising and that forces the operators of these recycling facilities to make their processes more efficient.

Eve: [00:22:30] Interesting, so can you tell me what your team looks like? And you said you’re a small company? What does that look like?

Harri: [00:22:38] In the early, earlier days when a lot of the stuff that we had to do was quite sort of exploratory in nature, then I think I maybe had a 10-person team at that point. And I think we are about 60 persons at the moment. And then nowadays, when our focus is on delivery and maintenance and making sure that our customers get basically, professionally built and maintained equipment, then that means that the role of sort of rocket science is something that is luckily less needed today than five years back, when we still had problems in making sure that the robots actually keep working. And now, at the moment, we are focusing on making sure that our first about 50 customers are happy. And also, my team is now basically focusing on measuring and estimating the performance of the robot. And that’s actually quite a fascinating problem because one thing that people really don’t realize about waste is that waste is extremely hard to measure. The only thing that is easy to measure is to drive a truck on a weigher and notice that there’s 20 tons of waste in the truck. But then again, measuring what’s inside that container. The only known way of measuring it is actually to have some guy come over and take a peek.

Eve: [00:24:10] Interesting. That’s the manual bit, right?

Harri: [00:24:14] Yes. And that’s currently a quite a massive blocker in the waste industry, because if you think of an industrial process, it works because it’s measured. Whereas in the waste industry, it’s a bit difficult to even notice whether the process is actually working well or not. So, if you have a facility that sorts plastic, let’s assume, let’s say that this facility provides 10 tons of HTP plastic a year. So how do you know that there’s actually 10 tonnes of plastic instead of nine tons of plastic and one ton of other stuff? Well, you don’t really know. And of course, you will know if you have a process that really dislikes these contaminants, then you notice that something went wrong when you put into that HTB plastic in the process and you notice that there’s an explosion, then you notice that maybe there was a couple of these nice lithium-ion batteries inside that 10 tons of HDP. And of course, that’s too late. And in order to prevent that, there’s manual checks that are done more or less sort of consistently and the problem of this manual checking is that it’s expensive and it’s also very difficult to get a statistically relevant measure of basically a pile of waste by just a guy eyeballing it. And connection with robots is that the robots actually do look at every single object that comes under their sensors, and they take a really hard look at it and they may determine whether it should be picked or not. And that means that the robots actually can tell you quite a lot of what the customer actually had flowing in his waste process. And there are also some other sorting equipment that can tell that but they are not quite widely used yet, and they definitely are not used at the front gate of these waste processing facilities. So whatever people put in the waste basket that will at some point end up in one of these facilities, and no one really knows what the stuff is, we see one glimpse of it, and we are working in making sure that the robot can actually tell something useful of the waste itself. And over time, it may be that the knowledge of the waste itself, that might even be more valuable to the customer than the sorting result.

Eve: [00:27:00] So, yeah, I always wonder about sorting residential waste, which, I can’t imagine is an exact or efficient process, I think most people probably ignore the guidelines for recycling, and everything ends up being dumped in one place, so it feels like all that waste you’ve got to go back to the beginning.

Harri: [00:27:20] That’s an interesting question about how much people should be sorting at home. And I guess the extremes are that, especially in the US, there’s, in a lot of public places, there’s a big container where you dump everything, and it says that it’s sorted somewhere else. And then another extreme was that I was skiing in Austria some years back and that flat that we rented, it had nine garbage bins.

Eve: [00:27:50] You know, that’s very common in Germany, too. My husband has shared photos of me of these recycling bins and even more so there’s limited hours when you can put glass in them because it might disturb the neighbors.

Harri: [00:28:03] And you need to have nine of these in your kitchen. So, they’re under the sink there’s three, and I don’t know beside the sofa, there’s two and there’s a couple of in the cupboard over there and it’s just complete insanity because if you have nine categories to think of then it just, it’s ridiculous. It will just get people annoyed. And it’s also not efficient at all, because the problem is that you need to have nine different trucks visiting your home, or you have, need to have one truck that has nine compartments. And they all fill at different sort of pace,

Eve: [00:28:41] And you have to have someone who’s diligent enough to fill them properly, right? Yeah, the human element.

Harri: [00:28:46] I don’t mind that because of course, we’ll happily sell robots that fix those issues later on at the plant. But I personally, I think that there’s like, first of all, this bio stuff, leftover food and that should be kept separate because that’s really a nasty thing because it will foul up everything else. And then after that, well, I would say that glass is quite straightforward. Uh, in Finland and other European countries, at least we have this, and I guess in the US too, there’s

Eve: [00:29:26] Some places, not everywhere.

Harri: [00:29:28] Yeah. You’ll return empty bottles, and you get some money back.

Eve: [00:29:32] Yeah.

Harri: [00:29:34] And so that makes sense. And then cardboard and paper, probably. But then if you put people starting to sort of recycle different kind of plastics, then it’s just not going to work.

Eve: [00:29:48] But even the paper like, yeah, some people argue that they put the dirty pizza box in the paper recycling, but it’s dirty, it’s got food in it.

Harri: [00:29:58] Yeah, yeah there’s a lot of this. My wife has also lived in Germany, and she also lived in Switzerland for a while, and they are absolutely sort of fanatic about what the neighbors put in the trash.

Eve: [00:30:12] So recycling is a really big business, and maybe your robots have to develop a sense of smell as well. In the ZenBrain,

Harri: [00:30:20] I felt that for a long time we have all the technology that we will ever need. So, the technology is are not really the difficult bit. The difficult bit is actually finding a customer who can make a business out of a process that has a robot. And for these new areas where they are no working large scale solutions, it’s going to be really hard because they would need quite a massive capital to set up a shop that would produce enough of these, whatever resulting fractions that would be, where the volumes would be so high that using those fractions would be a business for someone else. So, if you want to recycle textiles, I guess recycling textiles itself is not necessarily that hard. Uh, but the problem is that exactly what are you going to recycle, what are your fractions and what’s going to happen to those fractions? And that’s, what are you going to do with, for example, cotton that has been reclaimed from textiles. Do you, like, it would be really stupid to like, incinerate it. It would be even more stupid to put it into a landfill. There’s a company that does these sound insulation panels out of the reclaimed fiber.

Eve: [00:31:45] There’s a company in Pittsburgh that makes fabric and is done very well out of plastics.

Harri: [00:31:49] Yes.

Eve: [00:31:50] So actually, plastics from Haiti, so they’re very, very specific. I don’t imagine they have robots sorting that in Haiti, but that’s what they do. Yeah, interesting. So just to round up, what are some of your favorite success stories, you know, people where things really change because of one of your robots?

Harri: [00:32:14] I would really say that this recently opened facility at one of our customers, Remeo, here in Finland. It has 12 robot arms, and the plant is designed not to send anything to landfill. That’s quite a remarkable achievement.

Eve: [00:32:31] Yeah, that is.

Harri: [00:32:33] And the plant is brand new and it’s quite, sort of, well it’s something else. I’ve seen a lot of waste processing plants and all of them are fascinating in their own manner. But this is something new and it’s enabled by robots, and it has taken us basically 10 years of work to get there.

Eve: [00:32:52] Interesting. So that’s a glimpse of the future for sorting waste. Nothing goes to a landfill.

Harri: [00:32:59] Yep.

Eve: [00:33:00] Well, thank you very much. You’ve been heard to say “lately, I’ve also been up to my elbows in trash”.

Harri: [00:33:07] Yes.

Eve: [00:33:08] So I’m just wondering, are you having fun? Is this interesting work?

Harri: [00:33:13] Yeah. Waste is fascinating because going to a waste plant, well, the first thing you notice basically might be the smell, but the big thing in these waste facilities is the conveyor belt. That’s where the waste is flowing and it’s just mesmerizing. And you’ll see all of the, basically, by-products of humans living, and for some really completely inexplicable reason when we go at the site where our big robots sort construction and demolition waste, there’s, like, uncanny amount of shoes on the belt. Yes. And I just, at some, we looked at data on one of our sites in Norway, and that was only for one day, and I just basically had to calculate the rate of shoes appearing on that line. And the conclusion was that if that rate holds for a month, they will have a ton of shoes. And it’s really like, absolutely amazing because if you go on the belt, it goes like half a meter per second and there’s a shoe and then, whoa, that’s a shoe, and then wait for 10 seconds or a minute, hey, there’s another shoe. But you can’t figure out how many shoes there actually are over a one day, or one week, or one month of production. And that’s the kind of things that’s really…

Eve: [00:34:42] Really fascinating.

Harri: [00:34:43] You never get bored.

Eve: [00:34:45] No. So, I have to ask, are there more women’s or more men’s shoes?

Harri: [00:34:50] We haven’t really made statistics, but I’m actually absolutely positive that at some point, our A.I. will have this built in function in detecting shoes.

Eve: [00:35:02] This is really fascinating. Well, thank you very much for joining me. I really enjoyed it, and I can’t wait to see what you scale up to.

Harri: [00:35:11] Thank you.

Eve: [00:35:11] Wonderful.

Harri: [00:35:12] Yeah, me neither.

Eve: [00:35:17] Smart brains building smart robots to sort trash in very smart ways.Eve: [00:35:24] You can find out more about this episode or others you might have missed on the show notes page at our website RethinkRealEstateForGood.co. There’s lots to listen to there. A special thanks to David Allardice for his excellent editing of this podcast and original music. And thanks to you for spending your time with me today. We’ll talk again soon but for now, this is Eve Picker signing off to go make some change.

Image courtesy of Harri Holopainen, ZenRobotics

It’s the data, stupid.

Joseph Minicozzi is an urban designer who wants to help communities understand the economic impact of development. Like demystifying tax codes, government jargon and municipal finance data.

In 2012, Joe created a data-focused consulting company called Urban3. Based in Western North Carolina, Urban3 was spun out of Public Interest Projects, a non-profit focused on reinvigorating downtown Asheville. For over a decade Joe had worked there as New Projects Director, including a two-year stint as executive director of the Asheville Downtown Association.

Urban3 embraces data and GIS mapping to highlight land value economics, property and retail tax analysis while wedding that to community design. While they have a vested interest in Asheville, Urban3 has consulted for cities both in the U.S. and abroad.

Previous to U3 and Public Interest Projects, Joe was a founding member of the Asheville Design Center, a non-profit community design center. He also worked as independent consultant on urban design and planning issues for many years, before which he was the primary administrator of the Form-Based Code for downtown West Palm Beach.

Joe holds a Bachelor of Architecture from the University of Miami and a Master of Architecture and Urban Design from Harvard University. In 2017, Joe was recognized as one of the 100 Most Influential Urbanists of all time.

Read the podcast transcript here

Eve Picker: [00:00:08] Hi there. Thanks for joining me on Re-Think Real Estate for good. I’m Eve Picker and I’m on a mission to make real estate work for everyone. I love real estate. Real estate makes places good or bad. Rich or poor, beautiful or not. In this show, I’m interviewing the disruptors, those creative thinkers and doers that are shrugging off the status quo in order to build better for everyone. If you haven’t already, check out all of my podcasts at our website. Rethinkrealestateforgood.co. Or you can find them at your favorite podcast station. You’ll find lots worth listening to, I’m sure.

Eve: [00:00:58] Joe Minicozzi has been recognized as one of the 100 most influential urbanists of all time. Although he trained as an architect and urban designer, that honour was not bestowed for designing buildings or places. Joe’s influence comes through data. Joe helps communities understand the economic impact of development. He does this by tracking data in the built environment. Demystifying tax codes, government jargon and municipal finance. Stuff that most developers and governmental entities don’t think about when planning their next development project. Joe’s deep dives have uncovered some astounding and important truths about the cities we live in. I’m fascinated by his work and findings, and I’m sure you will be too.

Eve: [00:01:50] If you’d like to join me in my quest to rethink real estate, there are two simple things you can do. Share this podcast and go to Rethinkrealestateforgood.co, where you can subscribe to be the first to hear about my podcasts, blog posts and other goodies.

Eve: [00:02:12] Good morning, Joe. I’m really delighted to have you on my show today.

Joe Minicozzi: [00:02:15] Thank you for having me. I’m glad to be here.

Eve: [00:02:18] So,I trolled your website a little and I found a really, which is actually a really interesting name. Your business Urban3. I found a really interesting quote that I want to understand. Don’t fly blind. Visualize and reshape your economic reality with Urban3. What does that mean?

Joe: [00:02:39] Well, the visualizations and visualizing your reality is, basically we use Esri software. GIS software to make maps of cities to reflect their economic position. What’s going on from a cash flow standpoint and what you find in that, is different building types actually produce more wealth than other building types. Or once you see the picture, it helps people realize that there’s policies that are actually affecting cash flow. And the name Urban3 is kind of a funny thing that we did that originally was supposed to be Urban Cubed because the three-dimensional environment is cubic. It’s the 3D world. You and I are both urban designers. So, I wanted to kind of play on urban design in the name. But the IRS wouldn’t accept the cube is a part of our name, and they dropped it to the 3 after the name, So,they were stuck with it. So,that’s where we’re at.

Eve: [00:03:40] They don’t accept the at the beginning too, you know? Yeah. Very strict rules.

Joe: [00:03:45] Very big rules. Yeah.

Eve: [00:03:47] Yeah. So, OK, So,you’re visualizing the three-dimensional shape of cities to determine the economic reality of the cities?

Joe: [00:04:01] Sure. Or to think of it is, you know, for the real estate developer folks on this podcast, you’re playing with the cash flow, right? Things cost money and you have to pay for them. You have to make money on rent to pay for the building. And it’s really simple cash flow and you need to make more money than it costs or else you’d be out of business. You wouldn’t be a real estate developer or even in business as a person, you know, I can’t sell donuts at a loss, you know? So,cities are the same thing. Cities are really big real estate development projects and counties more so. Counties are are fixed. You can’t annex the next county over. So,when you have a city, it’s got a cost of roads, the cost of pipes, the cost of infrastructure, infrastructure that real estate wouldn’t be worth anything until somebody ran a pipe and a road to it. So, the question I ask is, are you paying enough taxes to cover the cost of that expense? And what we demonstrate with these models is we show it. We show how financially subsidized certain development patterns are.

Eve: [00:05:03] And So,and how do you create these models?

Joe: [00:05:07] That’s math and fancy software. It’s a geographic software, So,it’s got networks within it. You know and cities already have the data. That’s the thing that’s kind of crazy. They alSo,have the software. We’re just we’re just innovating the use of the software.

Eve: [00:05:25] So,for people listening, I’m sure they’ve seen spiky charts which show huge spikes of activity in urban areas. And so, it’s kind of like 3D charting of data.

Joe: [00:05:38] Exactly.

Eve: [00:05:39] Okay.

Joe: [00:05:40] Or do you think, there’s for more people who are into, I guess you call it BIM in the architecture world, or they are doing feedback systems of HVAC and all this stuff, and you’re starting to see way more sophistication on running your thermostat differently and particularly in green technologies. This is taking that same type of technology but applying it at a macro level across the city.

Eve: [00:06:03] So,we’re living in a data driven world and you’re applying data to helping cities become healthier economically.

Joe: [00:06:13] That and getting people to realize the consequences and costs of sprawl. So, we’re not going to change sprawl habits until people are aware of the true destruction that it causes and the defense of people that live in that, who wouldn’t take the deal when a house is a single family detached house in Eugene, Oregon, is subsidized to the tune of 1,400 dollars an acre. You know, it’s like…

Eve: [00:06:35] Right.

Joe: [00:06:35] You’d be stupid not to take that deal. So, if we want to see it, if we want to see…

Eve: [00:06:39] Call me stupid.

Joe: [00:06:42] Well, me too. I live, I bicycle to work.

Eve: [00:06:48] I walk down two steps. I’m in downtown.

Joe: [00:06:50] Ok, that’s even better. So,anyway, it’s and this isn’t to say that we shouldn’t have suburbia. It’s just, allow people to see the real consequences and people will make different choices. I know that if I, I’m Italian, my family has a history of heart disease. I like to eat pizza. I know because of my family history I can’t eat pizza every day. I would love to eat pizza every day. But because of the saturated fat content, I know that eating one slice is my caloric intake for like a week, So,I’ll still eat pizza, but I’ll exercise the whole rest of the week, you know, it’s just keeping things in balance.

Eve: [00:07:26] So,who? Who comes to you for help?

Joe: [00:07:29] Initially, it was activists that were doing conservation and community planning at large. The Sonoran Institute in Rockies. And over in California, the local governments commission. Now it’s we get finance officers, city managers, planning directors, mayors, politicians. Our clients are all over the place. And it’s because our work is more well known.

Eve: [00:07:55] And when did that shift, do you think?

Joe: [00:07:58] Well, initially, here’s what’s funny, I used to work in a real estate development for a company called Public Interest Projects and we were a for-profit real estate development company in downtown Asheville. It’s like basically think of it as a $15 million revolving fund. 75 percent of the money went into sticks and bricks, the buildings, and we reserved 25 percent of that fund to seed businesses and get businesses going on the ground floor. Our time is the direct opposite. We spent more time with the entrepreneurs than the buildings because businesses need help. And then this thing called the recession happened. I don’t know if you remember that, but and what happens in real estate development? We were dead in the water, So,I was actually going to conferences and explaining to people how to articulate the benefits of urban development in downtown stuff and actually started a presentation in Seattle Smart Growth Conference with a quote from Mark Twain that says a person who won’t read has no advantage over one who can’t read. Right? So,that’s a quote about literacy. If you choose not to read, you’re just as illiterate as somebody that can’t read. And I had my hand in the air and I said, OK, who in this room understands the tax assessment system and how property valuation happens in the United States? And I’m standing in front of a bunch of my peers, urban designers, landscape architects, planners. Not a single person raised their hand, and I was dumbfounded. I’m like, look, I’m trained as an architect. I like to look at pictures, but I read the tax system. It’s not hard and it basically is an incentive to crappy buildings. That’s simple. And people came to me like, we just hire you to do that, and that’s how Urban3 got started.

Eve: [00:09:35] That’s really interesting.

Joe: [00:09:36] Probably five years in. It changed.

Eve: [00:09:40] To what?

Joe: [00:09:41] Then it was seen as like, this is some sort of gimmick that this is just, you know, Joe being cute to, OK, we need to do this stuff. When I when I started doing the value per acre analysis…

Eve: [00:09:52] It took five years.

Joe: [00:09:53] People are slow. Good.

Eve: [00:09:55] Good things take a long time. People are slow.

Joe: [00:09:58] Well, it’s all right. It’s good to be skeptical. The irony about all of our work, this is really simple. When you do a per acre analysis, it normalizes all real estate into a metric unit. Like think of miles per gallon. We don’t see miles per tank. So,we all know the gasoline is what drives the car. So, all tanks are different sizes. Well, the same is true with real estate. The irony is like what we’re seen as like just a cute little trick of doing value per acre analysis. And seriously, economists would tell me that they’re like, Oh, that’s a gimmick. I’m like, Are you high? Like, Is there more land on this planet? And so, if you look at literature from the 1930s and 1920s, the development, I’ve got books, historic books from the 1920s about building small neighborhoods. The whole thing revolves around value per acre analysis. That was commonplace back then. Somehow, in the intervening like thirty interesting year gap, we somehow lost this idea.

Eve: [00:10:54] Interesting.

Joe: [00:10:54] Australia, they do it on a per hectare basis. Like they understand the value of land in Australia, but not here.

Eve: [00:11:00] Interesting.  Thats’ because most of Australia is desert. Probably. Seriously.

Joe: [00:11:05] You’re alSo,reasonable people. Interestingly, we’re cousins, right? Like, we both came from the same parents. Like we like poke mom in the eye. We were the first ones and then the United States were, like, we don’t need to be British anymore. We left with the same damn tax policies. You in Australia, us in the United States and Canadians. In the intervening two hundred and something years, the Canadians, the Australians and New Zealanders all adapted their tax policies. In the United States we didn’t. Ours is the most crude, blunt instrument.

Eve: [00:11:38] Yes.

Joe: [00:11:38] If you tax on value, there’s a perverse incentive to build crappy buildings, period. That’s it.

Eve: [00:11:44] Right, right. Ok, So,I’m going to break this down a little because maybe I’m one of those stupid people. But I mean, I do understand this, but still. I live in downtown Pittsburgh, and the value of residential is pretty high in downtown Pittsburgh. And I take up a very small portion of land because I live in a unit that is in a building that is four stories tall. Many people live in units that are much taller than that, So,they take up an even smaller portion of land. But the city gets substantial taxes from my unit. If I took my unit and I bought something equivalent in an outlying suburb of Pittsburgh, they had the same value, let’s say, to $500,000 value, OK, $500,000 in a building which has a whole bunch of other things going on it that are alSo,taxed.

Joe: [00:12:37] In taxes.

Eve: [00:12:38] Versus $500,000 on a one-acre piece of land in an outlying suburb. The city gets the same return, right?

Joe: [00:12:49] No, they’re getting well. Let’s just say you’ve got, we’ll go with a coffee shop on the ground floor and three stories of condos, right, for your building?

Eve: [00:12:58] Oh, no, no, that’s what I meant. Yeah, no. They get way more return for the little sliver of land downtown than the one acre on the outlying in the outlying neighborhood.

Joe: [00:13:09] And on top of that, keep going.

Eve: [00:13:09] Yes, let’s see if I get this right. It’s a test. On top of that, you know, the infrastructure is already there downtown. The pipes that bring water into the building and Comcast cable and whatever else you need are there. Whereas if it’s an outlying piece of land that’s never been developed before, someone’s got to pay to get that stuff there, right?

Joe: [00:13:32] And…

Eve: [00:13:34] You can finish.

Joe: [00:13:35] Think of the frontage on that one-acre parcel versus the frontage on your parcel. So, the consumption of cost is 12 times for the frontage versus your frontage, So,in addition to the fact that yours is already amortized its way out and paid for itself, probably in two cycles already, their stuff is like you’ve got to run it out there, you’ve got all the infrastructure that gets you to that point that’s not being paid for because of the existing. There’s a lot of suburbs that you’ve got to go through to get to that end of the line, and all of those suburbs still don’t pay for themselves. So, it’s essentially, we do a lot of work with strong towns. There’s a guy Chuck Marohn, who’s a civil engineer, and Chuck calls it the Ponzi growth scheme, and he’s totally right. The only way that we look, we look solid on paper, the more we grow in suburbia because we’re getting new cash flow. And everybody should have caught this when the recession hit. When the recession hit, all of a sudden, cities were broke. It’s like, well yeah, you should be able to cover your cost if nobody comes in the door and buys a commodity, right? I should still be able to pay rent if nobody hires me. I have a reserve account and we should be able to get through, in our case, our business, we can handle about six months of working without new clients coming in the door. With cities, if they don’t have new permits, all of a sudden, they’re broke. Like that should tell you something. We should tax our system to be able to cover the costs of what we’ve got. In the case of Pittsburgh. When you lost your population, you’re essentially carrying all of this extra infrastructure for a city much larger than you, So,you should not be adding more to it. You’ve got to like, find ways to compact a little bit.

Eve: [00:15:19] Yeah. Now in the Urban Redevelopment Authority’s favor in the city of Pittsburgh, they’ve always really stressed trying to fill out the existing neighborhoods in the support they provide. So, and way back, we had a mayor, Tom Murphy, who, you know, probably familiar with, who really went out on a limb and took operating funds and created a development fund, the Pittsburgh Development Fund, to support projects right in the city because I think he got this, right?

Joe: [00:15:51] Yeah, he did. Like in the case of South Bend, Indiana. Now, the Rust Belt, the big expense of an infrastructure, the big, expensive stuff is lift stations and force means. Everything else gravity feed, you just put a pipe in water goes downhill, but the force means we have to push it uphill or something like that and then lift it. That’s the expensive stuff. So,in 1960, they had 130,000 people, and today they have 103,000 people, So,they lost 22 percent of their population.

Eve: [00:16:22] Which is quite a lot.

Joe: [00:16:22] Yeah, So,but in 1960, they had three lift stations and a third of a mile of force main. Today they have 43 lift stations and 19 miles. So, a 1,000 percent growth in lift stations and a 6,000 percent growth in force mains even though their population was going minus 22. That is a recipe for disaster. When you’re, and cities do this, they’re just like, well, people want new houses out at the edge. So, we’re going to build pipes out there for the builder to build housing. It’s like you were basically building yourself off a cliff. Somebody’s got to pay for this stuff and the developers pay for it. But then they fold it into the mortgage and then the city shows up and like, whoa, new infrastructure. Thanks. Thanks. Thanks, developer. They’ve just taken on this huge liability in maintenance and stuff that doesn’t fix itself.

Eve: [00:17:12] Right. Interesting. So, what’s been the best turnaround story for you? Like, you know, can you describe a client you’ve worked with that perhaps was unbelieving and really kind of transformed their city or at least the processes to?

Joe: [00:17:30] It’s yeah, that’s not an easy question to answer because it’s all been different. And you know, one of the things that you’ll see in our work, and this is something you and I probably have a lot in common in this, that we’re both visual people. I’m a visual learner and a visual thinker. And that’s a lot of people that go into design education get that way. And then we then we get indoctrinated full bore into the design world. So, for me, it’s all about pictures and visuals, and in our work, we make it extremely visual, but some highly nerdy stuff like lift stations and tax flow and stuff like that. But if I can make a picture of it, it communicates to regular people. And what I find with politicians, I mean, think about politicians. I don’t mean this in a demeaning way,

Eve: [00:18:19] But they’re not trained in any civic design.

Joe: [00:18:23] No.

Eve: [00:18:24] Or any of this. They’re politicians, you know, this is a career.

Joe: [00:18:28] You win a popularity contest and you’re like, I’m going to help fix the city and then you show up and you’re like, oh my God, this is a disaster. Where do I start? And then you meet, you meet the technicians that run the city and they’re like planners talking about form-based code or whatever. And you meet the engineer and they’re talking about these, you know, whatever TDM models. You have no idea what they’re talking about, they’re talking in this kind of gibberish. And so, it’s actually a professional problem, not a political problem that the politicians really have no idea what’s going on. So, they just basically just go with the flow, and we take the tack in argument that is the professional that needs to visually communicate, so that people understand it. So, what we’ll do is, we’ll take in South Bend case, Mayor Pete was the mayor when they hired us. We put all the pipes on a map and showed them that they had enough pipe that would go from South Bend, Indiana, to Asheville, North Carolina. And I said, like that, you get to fix that every 40 years. Good luck with that. And once you do that, people are just like, oh my God, we don’t need to add more to this. You know, it should. But like, my mom could understand that.

Eve: [00:19:31] I should not be laughing, but it’s just it’s ludicrous. I’m sorry.

Joe: [00:19:36] Well, it’s systems.

Eve: [00:19:37] Right.

Joe: [00:19:37] You know, it’s you know, you and I talked before the recording. For me, like a very influential author for me is Michael Lewis, and the book Moneyball is brilliant. And so, you know, I worked in real estate development. We’re actually still in the developer’s office. But our company was $15 million. Our city is worth, at that time, $12 billion. Ok, that’s Asheville. 90,000 people taxable value of $12 billion. I know our politicians, some of them are friends of mine. I can’t imagine them running a $12 billion company. And then it’s just like, what do people want? Let’s have more trees. It’s like, I got that. But can we think a little bit more sophisticated than this? And in the beginning of Moneyball, Michael Lewis is talking about the Oakland Athletics being in the playoffs all the time, and they’re the cheapest team in baseball. And and then he meets Billy Beane and they talk about Bill James statistics and the data that Bill James was talking about that was an anathema to baseball. So, the Oakland Athletics were basically following this guy who was asking these really crazy questions like why is an error and error? You know, I fail to close my hand on the ball, but at least I stopped the ball. Shouldn’t we be measuring where the ball lands and where the person is that isn’t catching the ball. So, that distance is really what the problem is because somebody could just never be where the ball lands and they’re never going to commit an error like that makes perfect sense. But in baseball, they’re like, you can’t question the error. We’ve had the error forever. And so, the quote that nailed me in that book, baseball is a is a 7-billion-dollar industry operating without mathematics.

Eve: [00:21:21] Oh, wow.

Joe: [00:21:22] Let that wash over you for a second. I just told you my city is twice the value of all baseball.

Eve: [00:21:28] Wow.

Joe: [00:21:28] And it’s just like Pittsburgh is worth maybe 45 billion.

Eve: [00:21:34] Is anyone using math in Pittsburgh?

Joe: [00:21:39] Some people. I’ve done a couple of presentations there. We actually did a valuation of, took all municipal park property and said, OK, what’s how could you cash flow this? So, there’s the HH Richardson jail that’s at the backside of the county building.

Eve: [00:21:55] That’s a beautiful building. Gorgeous building.

Joe: [00:21:57] Incredible. Modeled after the Bullfinch Jail in Boston, a similar kind of like star shaped plan, although the Richardsons one’s kind of like a half star.

Eve: [00:22:07] Beautiful building.

Joe: [00:22:07] Phenomenal. It’s two-foot-thick walls. But anyway, in Boston, they converted that jail into a lobby for a hotel and stuck a hotel on the back side of it. So,it went from a non-taxable building and it’s actually a really cool lobby. And now it’s kicking out about $3 million a year in taxes. So, went from zero value to $3 million of cash flow to the community. You didn’t lose the building. You know, it’s not a jail anymore, it’s a lobby, but people can go into it. So, we just said, Well  let’s just do the same thing with the Richardson jail. The Richardson jail right now, it’s been renovated, but it’s being used for like county offices. It’s like those could be…

Eve: [00:22:49] Family courts, I think. Yeah.

Joe: [00:22:51] Does it need to be in that building?

Eve: [00:22:54] Such a shame.

Joe: [00:22:56] Yeah.

Eve: [00:22:56] So, I just interviewed Jonathan Cohen, who’s the founder of the Society Hotels in Portland, Oregon. And you know, I’ve always thought the riches in jail, like if you had if you had travelers who wanted to stay cheap, you know, what he’s done is he’s created these bunk beds in this old historic maritime building. So, people can stay there for as little as 35 to 50 dollars, pre-pandemic, obviously, and share a bathroom. You know, people who really don’t want to spend $200 on a hotel room. And wouldn’t it be great to stay in a cell like it would be really fun? Maybe not So fun for some people who originally stayed there. But yeah, I’m totally with you. It’s a very weird re-use.

Joe: [00:23:43] And there’s also, there’s a little corner. There’s like a little tiny, little triangular, oddball lot behind it. That’s just this abandoned, weird site where there’s like a memorial out there for something.

Eve: [00:23:57] Interesting.

Joe: [00:23:59] Seriously, you live in Pittsburgh. Go walk behind this, there’s like this…

Eve: [00:24:01] I will. I will.

Joe: [00:24:02] This weird little triangular piece of dirt that’s there. It’s like, really, this thing is abandoned. There’s like a street that is unnecessary. So, what if we just threw the street in in that little triangular lot? And maybe that’s where you put the hotel and you just build a little hotel tower back there and tap it into the jail? Call it a day. The real simple is the quarter acre, which is a huge piece of land in the downtown. We estimated the taxable value of that would be about seventy-five million dollars and that was 2017. So, it’s like, OK, So, you currently have zero on this thing. You can pump that thing up to 75 million. And let’s say you hold it as a ground lease, you say, look, we’re not going to give this to the developer. We’re going to let them lease it for 75 to 100 years. And then we’re going to as the city of Pittsburgh pull that revenue and fund things like Eve. Eve’s doing cool things. We’re going to create a cash flow to fund Eve in equity projects, and she’s going to go off in neighborhoods and help build wealth. We now have a cash flow off this thing. Anyway, we did that citywide. We’re like, we’re not saying get rid of the University of Pittsburgh, but seriously, there’s land all over the city. The current Pittsburgh GDP is $17 billion. We estimated off public assets doing projects like what I just said, or there’s a four-acre police impound lot on the damn river. It’s like seriously.

Eve: [00:25:28] I know I know it. I know it. It’s such a waste of the space.

Joe: [00:25:31] So, yeah, I mean, you could hit it out of the park on a site like that. And it’s like, seriously, this is the best place to put stored cars in Pittsburgh. Anyway, So, your GDP is 17 billion. We estimated you could get about 15.6 billion off existing assets in a way that’s mutually beneficial. Like, that’s a hell of a value game for Pittsburgh. And cities all across the country have that. Yeah, 15 billion is a pretty big deal. I wouldn’t, you know, I would take half that. If you want to give me half that, I’ll be happy

Eve: [00:25:59] And no one would, no one would listen to you.

Joe: [00:26:02] Well, I think they were a little stunned, you know, because it’s just a different way of thinking. And the thing that’s crazy is this is commonplace in Europe. This is commonplace in Boston. This is what you know, Boston. They’re just like, Yeah, we got to use that jail for something.

Eve: [00:26:14] You could basically double the income for the city.

Joe: [00:26:17] It’s double the GDP, the gross domestic product, which is that’s your cash flow of your place. So, yeah.

Eve: [00:26:26] Pretty, pretty significant. And is that what you find in most cities? That you do studies for. Is it a similar? Does it vary greatly depending on the the land available or the history of the city?

Joe: [00:26:40] Yeah. In that and that aspect, yes. Pittsburgh, obviously, you have tremendous riches of these buildings that you can’t reproduce at cost the way that they exist today. So, it’s like you’re in a better position. Places like Phoenix, Arizona, you know, you don’t have buildings like that, but you still have massive tracts of land and surface parking lots and downtown that the city owns. It’s a complete waste of real estate, and they’ll be like, well, Joe, people need parking. It’s like, all right, we’ll build a parking deck and wrap it with a different building that’s producing taxes. You don’t need to. You know, there’s plenty of developers that would kill for that location if you gave it access and you’re actually predictable with the developer. Developer doesn’t want to go through a process of a community design thing where it’s like they have no idea what’s going to happen by the end of it. You know, things cost money, architects, attorneys, all of that. If you drag somebody through a three-year process, they need to make that money back. You know, it’s that simple. And it’s just people just aren’t even thinking that simply about it.

Eve: [00:27:42] Interesting. So, how long have you been in business now with Urban3?

Joe: [00:27:48] 10 years.

Eve: [00:27:50] And how many clients have you had?

Joe: [00:27:53] We’ve worked in four different countries, 40 different states. I don’t, like 150 different cities. We’re slowly becoming like the international tax experts, So, as a by-product of all of this. And there’s really weird things out there like finance departments in government. So, we were sitting down. We were working with Chuck Marohn from Strong Towns in Louisiana. And Chuck and I were interviewing all of the department directors and we sat down with the finance officer. And finance departments keep a depreciation schedule of their roads and pipes and all this stuff. They know what it costs. Yet it’s in a third set of books called the called the Asset Ledger. And Chuck was like, how is a pipe an asset? And they’re like, well, it’s got money, you know, it’s worth money, and so, it’s an asset. And I said, Laurie, can you pick your roads and pipes up? Can you pick them up out of Lafayette, Louisiana, and sell them to Baton Rouge? And she goes, well, no, and I said, that doesn’t sound like an asset to me. I said my computer is an asset to my business, I can sell it, it depreciates. If I had delivery vehicles in my business, those are assets. How is a road an asset? And she’s like, well, that’s just our finance standards and the gap documents that we have to follow. I’m like, who the hell made those? And she’s like, well, I don’t know. So, now you’re the mayor of Pittsburgh and you’re given the books. And your books have costs, expenses and revenues. And then there’s this third set of books called The Assets. You don’t look at the assets, you’re just like, OK, we’ve got a lot of money over, sitting over here. These gifts of gold called roads. It’s like they’re not assets. It’s like this big anchor you’re dragging.

Eve: [00:29:39] A huge liability. Yeah, they’re a liability.

Joe: [00:29:43] So, cities can’t see this because of something as simple as we follow these gap standards. Well, who created the gap standards? The gap standards are created by bond companies. So, bond companies want to know  how much stuff cities have so that they know how to turn you into a piggy bank. Because they want to give you more money. It’s like payday loan scandal or something like that. It’s like, oh, here’s another bond. And so, cities are like, we’ve got a AAA rating. It’s like, are you crazy?

Eve: [00:30:13] Are you telling me the bond ratings are based on roads and pipes?

Joe: [00:30:17] Yeah.

Eve: [00:30:18] Oh. That’s a shocker.

Joe: [00:30:21] Mm hmm. No one ever told you that, did they?

Eve: [00:30:25] No. No.

Joe: [00:30:25] That’s the thing is like, you and I go through urban design school, we maybe learn a little bit about a real estate development pro forma. Taxation, maybe like a half day class or half a class on that and one session about municipal finance.

Eve: [00:30:39] I don’t think I had any when I went through school.

Joe: [00:30:42] Yeah.

Eve: [00:30:42] And what’s more, I don’t think architects get any.

Joe: [00:30:45] Oh God.

Eve: [00:30:46] I mean, architects are woefully undereducated when it comes to both real estate development and finance.

Joe: [00:30:53] I would say wilfully ignorant. I wouldn’t say woefully undereducated because we, and I’m saying putting myself into that bucket, it’s like, Oh, that’s finance. I am a designer. I am above that. It’s like, Oh, really, OK?

Eve: [00:31:08] As a developer, we sit at the table with an architect thinking, please don’t draw that line. It’s going to cost me too much money.

Joe: [00:31:14] Yeah. And it’s and it’s sad because I love architecture and I love the profession. I think the best education you could have is an architectural education because you’re basically given a blank piece of paper and they’re like, OK, now be creative.

Eve: [00:31:27] Oh, I so completely agree with you. I think architects are trained to be problem solvers, to turn nothing into something. It’s an amazing education.

Joe: [00:31:36] And be critical thinkers. And so, it’s like, All right, take that same critical thinking skill and just be a little curious over about finance. And in defense of architects, the language that people use in finance is deliberately opaque. And I think that’s the best thing about that movie, The Big Short, where they make fun of the opacity of financial language. Well, the same is true inside real estate development. We’re going to get some mezzanine financing. I used to sit in meetings with people. I’m like, What’s the mezzanine? And I would just do that just to be an idiot. But I was mostly making fun of the fact that this has created fictitious language, and I’m explain it to me, I’m just a dummy. I only went to Harvard. What do I know?

Eve: [00:32:16] You know? Yes. And what’s a sponsor? There is a lot of secret language in the real estate world.

Joe: [00:32:24] Yeah.

Eve: [00:32:24] And I have to say this about the SEC in the regulation crowdfunding rule, they created one of the regulations, one of the things that you have to do is explain things in plain English. So everyone can understand. And I kind of love that because what is the sponsor? What’s a capital stack? What’s the mezzanine? What’s like, you know, all of this stuff is like for very special people, but everyone should have access. Yeah.

Joe: [00:32:49] And it’s funny when people, you watch people and you’ve been hanging out with people like this, there’s like, oh, I got my capital stack and it’s like, I just picture people with like a big pile of money that they’re walking around with and they’re like, look at me with my pile of money. Like, you’re just like, come off as the biggest fool when people talk that way. But it’s like, I don’t know, I’m suspicious of that because it’s like, what do you really, did you really work at this or do you just know somebody that’s a banker? They gave you access to money, and you’re proud that you succeeded because you have access and availability that John and Jane Doe off the street don’t have that access. Or somebody that, God forbid, is a different color skin doesn’t have access to the same power and wealth that you’ve got. So, let’s talk about that and there’s matters of inequity baked into the system through the whole thing.

Eve: [00:33:36] Yes, I think the real estate industry is probably one of the most inequitable industries.

Joe: [00:33:42] We’ve done analysis of redlining in Kansas City, and we showed them that even today, when you drop the Red Line map onto the model, you see this staircase step down from green to red, So, you know the gradients of redlining.

Eve: [00:33:59] No, I don’t know the gradients.

Joe: [00:34:01] Oh, OK. So, in 1934, the Federal Housing Administration changed mortgages from seven years in the United States to 30 years. Think of that. That’s a huge change to the mortgage industry. And they said, you know, basically the dirty little secret here is these are Democrats doing this and they were doing it because we were afraid of socialism. So, our country was looking at Europe in the depression going, OK, this is a little freaky. They’re becoming socialists. We need to do something to make people homeowners so that when they own something, they’ll be less apt to want to be socialist. So, let’s find a way to make more homeowners in the country. And this is in the middle of the depression. And so, they created this system of we don’t know what Pittsburgh is like. We don’t understand Pittsburgh, but you have to come up with a map in Pittsburgh to map what’s good real estate, what’s desirable real estate, what’s declining real estate and what is hazardous. So, those are the four grades, the hazardous areas were the red areas. And so, arbitrarily you mapped your hazardous real estate, by like if it was next to a train yard or if it had an infiltration of immigrants. Or if it had Negroes.

Eve: [00:35:16] So, who did that mapping?

Joe: [00:35:19] Our local people. So, it was Pittsburgh did it to themselves. Asheville did it to themselves, cities 50,000 and higher did it to themselves. They did it in Kansas City. Incidentally, my favorite one is in Denver, where they took an Italian neighborhood,  because coincidentally Italians were the driving immigrant class of the 1930s and coming in at number two, where Germans. Well, what kind of Germans were coming in in the nineteen 1930s? That would be Jewish people. So, you find Italian neighborhoods and Jewish neighborhoods were redlined as much as is black neighborhoods.

Eve: [00:35:56] That’s interesting.

Joe: [00:35:56] Now what’s interesting about Italians is I can change my name to Smith, you know, or there were Italian neighborhoods in Denver. There was this one neighborhood that wasn’t redlined that was Italian, 50 percent Italians. And they wrote, right in the document, these Italians peddled liquor during the prohibition era. It’s like those are the mafia Italians. We’re not going to redline them. So, but as a black person, you can’t change your skin.

Eve: [00:36:20] No.

Joe: [00:36:22] So, your family wakes up that day that the map is adopted, and they can’t sell the house, right? Because no one can get a mortgage in that neighborhood. That went on for 30 years from 1934 to 1968. And so, for three generations, you don’t get, you can’t get a home rehab loan. You’re basically just disconnected from the financial system of our country.

Eve: [00:36:45] I realized that I just didn’t know how the initial mapping happened, I suppose.

Joe: [00:36:52] Well, we ran the number in one neighborhood in Kansas City, Kansas. Is like a half square mile where there’s just all vacant houses in it. Well, not all, but 700 vacant lots. And we just real simply went back in time, pulled the old values from 1930, glued the houses back on the map and ran a cash flow of if those houses just stayed low value but paid their taxes over time, how much taxes would they matriculate over 30 years? And it’s insane. It’s $30 million. So, when I was presenting to the community, I said, Look you need to realize your great grandparents were racist, period. There’s no way around it. They adopted racist policies. This neighborhood was redlined because it was black, and you basically wrote a check for 30 million dollars and flushed it down the toilet. That’s the cost and consequences of being racist. Now that was just one neighborhood. What did you what did you blow in the entire city?

Eve: [00:37:43] Wow.

Joe: [00:37:43] And that’s the thing that we need to. I think I would argue that that’s part of being anti-racist, is you have to point out the racism that happened and make it a way that people can understand it. It wasn’t at all comfortable to say that on stage in Kansas City, but that’s the truth.

Eve: [00:38:00] Interesting. So, I have to ask you, also, what does your team look like? How do you hire people in your office? Do you hire architects?

Joe: [00:38:12] God, it’s funny. We have one urban designer other than me, several planners. Most folks are GIS based. It actually, really, we don’t fully get into design the way that an architect or designer would. We’re information curious and a technically proficient with GIS software. The design side we can train internally, but we’re mostly looking for creative thinkers that understand this technology but are also ridiculously curious about systems in cities and have a sense of humor. We do a lot of joking in our presentations, in our data, is a method of delivering information because it’s pretty depressing to just drop a bunch of redlining stuff on people.

Eve: [00:39:05] Anyway, someone who has a sense of humor has probably a higher IQ, right?

Joe: [00:39:12] Well, it’s also, I don’t know, if you’ve read Daniel Kahneman’s Thinking, Fast and Slow.

Eve: [00:39:16] No.

Joe: [00:39:19] The guy is a psychologist at one. He won a Nobel Prize on behavioral economics or in economics. He and Amos are the godfathers of behavioral economics. And there’s a third one. His name is Richard Thaler, who also won a Nobel Prize in economics. And the three of them did all of these studies about how do people make the wrong decisions economically? And it’s there’s human flaws in the way that our brains operate. But there’s also ways that you could take advantage of those. One is where we’re as a species, we’re oral communicators. We tell stories. So, people need a narrative of understanding the economic data. We just don’t drop like a spreadsheet on somebody. We actually tell stories with the data. The other thing is like simple things like they would put pencils in people’s mouths. And you can see my camera and nobody else can, but. And they put one cohort of students through these tests with pencils in their mouths. In another cohort of students through the same test without pencils. And the students with the pencils in their mouths learn more than the students without. And what they figured out is that So, you watch my face? I’m smiling. You know, if you put a pencil in your mouth, you’re forced to smile, and when you smile, the back of your neck opens up. Your brain operates differently than if I’m sitting in the class with my arms folded and I’m like, looking at you like this, you know, it’s just there’s ways of learning that we have survived with and that we just basically use that. So, I highly recommend actually one of my favorite books is Misbehaving by Richard Thaler. And he’s one of the three Nobel Prize winners. Daniel Kahneman is awesome. His book, Thinking, Fast and Slow is incredible. I find it really hard to read. I much prefer Daniel Ariely’s, Predictably Irrational.

Eve: [00:41:12] These are all great titles, you know?

Joe: [00:41:15] Yeah. Well it’s, look, we deal with humans, you know. And we don’t, we go to design school. Even planners. Planners of all people should have degrees like some subset of psychology, you know, because they have to deal with groups of people. But it’s funny that we go into these professions, and we don’t learn how humans operate.

Eve: [00:41:34] So, I’m fascinated and I’ve lost my train of thought here completely.

Joe: [00:41:39] I’ve taken you off course. We’re supposed to be talking about real estate, aren’t we?

Eve: [00:41:42] No, but this is good. So, if cities adopted, you know, sort of this data exploration, what would cities, what would cities look like in the best of best of all worlds if they really paid attention and adopted, you know, this information that you’ve uncovered to their advantage? And what would we have to stop doing now that we’re doing?

Joe: [00:42:15] Well, it is. That’s a hard question. You know, there’s ultimately, I think we need to change our tax system. And right now, the majority of cities in the United States counties to operate off property tax. And So, think of it this way your building is probably worth what a square foot? Like maybe like 500 bucks a square foot?

Eve: [00:42:42] Oh, I’d be so lucky. Maybe 300.

Joe: [00:42:46] Ok, even 300. Like, what would it, you’d pay $300 a square foot to reproduce your building?

Eve: [00:42:52] No, but I couldn’t probably sell it for more than that.

Joe: [00:42:57] Ok, let’s call it 300. What’s a Walmart worth per square foot?

Eve: [00:43:01] Boy, I don’t know.

Joe: [00:43:02] Fifty. So, per square foot, you’re paying six times the production of a Walmart.

Eve: [00:43:11] Yes.

Joe: [00:43:13] That’s simple math, right?

Eve: [00:43:14] Right.

Joe: [00:43:15] That’s our tax system.

Eve: [00:43:17] Interesting.

Joe: [00:43:19] And it’s just like, what, so architects, of all people, we should be at the front line saying get rid of property tax as a valuation of property value is the indicator of taxation because there’s a perverse incentive to build crap. Wal-mart doesn’t make any bones about it. I actually went to, I presented at the International Association of Tax Assessing Officers Conference. I don’t know if you hang out…

Eve: [00:43:41] That must have been a blast.

Joe: [00:43:43] Oh, it makes it makes an AIA convention feel like Burning Man. It was the squarest thing ever. And but, you know, they’re cool people. I like, I love assessors. And the thing is like, there’s no other designers there. And I’m like wandering around with all of these nerds. I’m like, How the hell does this system work? Trying to learn from them? And the more I learn from them, I’m like, wow, that’s amazing, the way that they think. They like, go into a forest and they’re just like, is, is this a Norwegian spruce or is this a Douglas fir? I don’t quite understand what tree this is. It’s like, do you see the forest that’s around you? And they don’t. And so, they have their biases just like any other profession, and they are completely obsessed with figuring out what kind of tree this one tree is. And they will have an entire week’s long conference about that and not see the forest. And the head of Walmart’s real estate got up there and was the keynote speaker one morning. And I remember this, 3,000 assessors in the room. This guy did this amazing presentation on how cheap Walmarts are. He showed spreadsheet after spreadsheet on how crappy is buildings are. And I’m like in the audience drinking my coffee and I’m like, oh my god, this is brilliant. This guy is the bomb. This is the smartest thing I’ve ever seen anybody do. You’ve got 3,000 assessors in one meeting. You can get all of your property taxes lowered in one meeting, right? And then I’m like having a coronary because as a designer, I’m like, Holy cow, how is he getting away with this? Now, assessors in their defense, they’re agnostic. If it’s crap, it’s crap.

Eve: [00:45:15] It’s not about design. It’s not about, yeah.

Joe: [00:45:18] They’re like, thanks for making our jobs easier. So, I go up to the microphone and I was trembling. I was so, pissed off and I was like, Mr. Tyrrell, what’s the useful life of one of your buildings? And he goes, 15, maybe 20 years. We designed the building to depreciate it as fast as possible. We don’t care about the buildings. They’re throwaway. We’ll design another building, build another building, move into it and start the depreciation cycle down again. We don’t care about the buildings; we care about the transportation system. And once we set up a transportation system of goods and services, the buildings are thrown away for us. And I was like, damn. Like, that’s the life cycle of a cat. 15 years, you know, and so, when I present to people, I actually make fun of that experience and I actually show a big picture of a cat and I tell the mayor I’m like, is that what you want in your corporation? Is the CEO of a corporation that’s worth whatever, $15-billion, do you want a cat? And as long as you’re making that choice, that this is what you need. Awesome. The average Walmart consumes more in police services than it pays in property taxes. So, I tell people…

Eve: [00:46:17] Wow.

Joe: [00:46:18] Don’t hate the player. This isn’t about Walmart. Hate the game. Understand the game is in your control. And until you control it, you’re at the mercy of the game. So, cities that don’t look at their cash flow situation, they have these biases that roads and pipes are assets and not even look at them as liabilities. That’s their own stupid fault.

Eve: [00:46:37] Right.

Joe: [00:46:38] I’d like I wish we could all live in a version of Paris or something or Milan or, you know, I think you go to Europe, and you see these incredible cities and you’re like, what kind of what kind of Martians left these places for these people to live and happily? And then you come to American cities, and we live in such rubbish.

Eve: [00:46:58] Well, it’s partly the culture of the country. Like, you know, I lived in Australia, and I’ve lived in the states. And so, there’s a real cultural divide when it comes to ownership rights. You know, and property rights, and you should have complete control here over whether you can park your car in your front yard. Whether you can cut a tree down because it’s going to make your car dirty. It’s really not about the neighborhood as a whole or even the environment as a whole. You get to cut your tree down. It doesn’t matter if it looks bad like, or it doesn’t matter if it devalues the neighborhood. You can’t do that in Australia. In Australia, if you want to cut a limb off your tree, you have to go to City Council and get approval. Like it is, and people accept that. You know, they kind of accept that as the status quo. So, I think, you know, I don’t know what it’s like in New Zealand or in Canada, but that’s definitely, I think the dividing point I see. Does that make sense?

Joe: [00:48:04] You know, back to the point I made earlier that the interesting thing is culturally, we’re really not that far from you. We’re both basically British descent as countries go. Both about the same size. You had as much land as we did or more. Australia is a big country, but most of it’s desert. In our country, we kind of how do I put this? We have these narratives, and this is where the psychology comes in. So, we talk about freedom and all this stuff. But think about our country. Our country was formed on a tax revolt, right? We were taxed differently about our tea. We weren’t in control of it. So, we got pissed off at mom and dad and started a little fight and separated our country from their country. So, there’s a great old colonial barb in our country that people used to say as colonists, Don’t tax me, don’t tax thee, tax the fellow behind the tree. I love that saying. We’re a country of tax evaders. That’s it. And it’s like, and we’re fiercely independent, which is cool. And you know, there’s I live in Appalachia. You’re part of Appalachia. I was like in a meeting one time I got into this argument with this guy and you know, we went to breakfast the next day and he gave me his political philosophy and he’s like, Look, Joe, I run out in the woods with my gun. I go out with my gun and get out in the woods, and I run around, and he was doing this kind of like sitting in his chair, like he’s Chubby Checker doing the twist or something. He’s like, I run with my gun and I’m so happy. And like, you know, Steve, I don’t care. Do whatever you want with your gun. I don’t care if you sit in your yard and get naked and rub yourself on the belly with a chipmunk if that makes you happy. Knock yourself out. Would I have a problem with is that road to your house? You get to drive on that road every single day and you’re not paying for it? I think there needs to be a toll gate at the end of your driveway and you pay to use that road. And then when I go to drive past your house to go out mountain biking, I’ll pay to use that road too. And everybody should pay their own fair share. And he just looked at me and he goes. You know, that makes a hell of a lot of sense.

Eve: [00:50:16] Interesting.

Joe: [00:50:17] You know, So, rather than, what I find with people is we’re really good at this in our country. More so, now, is we will take our own little tribe and stay in our bucket and blame the other tribe without going across to understand their mindset. So, I understand Steve’s mindset. I understand the freedom because he’s been led down the primrose path that that’s some sort of American mythology until he’s confronted with the cost of that road. He doesn’t know that the road cost money. You know, he doesn’t pay for it. So, what I’d like to do is I’d like to see Steve get a tax bill that shows him his subsidy So, he doesn’t run around thinking he’s thinks he’s paying for himself. So, when we show that model, the reason why we do it county wide is in, particularly in my county, I’ve got two voters out in the county for every one voter in the city. Those folks out there control the place politically. They’re subsidized, So, they hate my city. In fact, they got my state legislator to call us a cesspool of sin.

Eve: [00:51:17] Oh.

Joe: [00:51:17] And that was on the downtown. Seriously and we’re out on the downtown association. And we’re just like, really? How about a thank you card for all the money we’re shelling out? We showed the model showing how much more taxes is coming out of downtown. Remember everybody in the county pays the same millage rate. So, we’re paying. I pay six mills in county taxes. People out there pay six mills. Their value, you can see it in the model is like one 20th what my value is. So, on a per square foot basis, I’m kicking out 20 times the taxes that they are. When you show it to them on the map, you’re just like, OK, so, what you’re saying about that subsidy that you guys have? You know, then they can see it. So, it’s really, it’s all of our responsibilities to try to find a way to communicate. And make a common ground, and that’s kind of why that’s our practice.

Eve: [00:52:06] Well, it sounds like you’re doing an amazing job and I have thoroughly enjoyed this conversation. I could go on forever. I’m such a nerd. I love this stuff. You showed me a pretty fabulous PowerPoint, which I would love to at least point to on our blog post for our listeners. Maybe you can give me a link, or I can post it there.

Joe: [00:52:28] Yeah. We’ll send you a link. We have a YouTube channel with a bunch of videos.

Eve: [00:52:32] Oh, that’s perfect.

Joe: [00:52:33] Some of them are super long. So, just for the audience, just be aware. But, but really, it’s their narratives. They’re all three act plays as far as I’m concerned, So, we do work real hard to make them fun to watch because it’s highly nerdy stuff, but you’ll see the visuals and the presentations.

Eve: [00:52:52] Well, thank you so much. I’ve really enjoyed the conversation and I hope we can continue it.

Joe: [00:52:57] Definitely. Thanks for having me. And anytime you want me back, just let me know.

Eve: [00:53:16] Joe brings energy, passion and a brand-new perspective to the built environment. If you look at the data, good stuff will follow. You can find out more about this episode or others you might have missed on the show notes page at our website, Rethinkrealestateforgood.co. There’s lots to listen to there. A special thanks to David Allardice for his excellent editing of this podcast and original music, and thanks to you for spending your time with me today. We’ll talk again soon, but for now, this is Eve Picker signing off to go make some change.

Image courtesy of Joseph Minicozzi, Urban3