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Technology

Waste to Energy.

May 24, 2023

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.

April 4, 2022

“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.

February 2, 2022

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.

December 8, 2021

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

Rent an (AgTech) Robot.

October 6, 2021

Mark DeSantis is a Pittsburgh-based serial technology entrepreneur, policy wonk and educator. He is also CEO of Bloomfield Robotics, a new Ag company out of the CMU Robotics Institute that uses AI and computer vision to measure the health of agricultural crops on plant-by-plant basis, or in their parlance … “crop estimation technology.”

Mark knows venture capital and financing, and how technology gets commercialized. In the last 15 years Mark has co-founded and run three other companies: RoadBotics, an AI-based product that monitors and manages roadway infrastructure; kWantix, an energy hedge fund; and kWantera, a GE Ventures-backed energy predictive analytics company. Mark also served as CEO of Think Through Learning, an online tutoring company, and was U.S. managing director of ANGLE Technology, a UK-based venture capital firm and consultancy. And as if that wasn’t enough, he also ran as the Republican mayoral candidate in the 2007 Pittsburgh election.

On the policy side, Mark served as director of government relations for Texas Instruments in Washington D.C., and operated in a number of positions in the Federal government during the first Bush Administration, including as a Senior Policy Analyst in The White House Office of Science and Technology Policy and the Department of Commerce. He was also on the staff of the late U.S. Senator John Heinz. Mark has sat on a number of boards and served as a consultant for a variety of technology companies throughout his career.

Mark’s robots are for rent. All over the world. And he believes, as do his customers, that his company’s robots will help us to produce more food on the finite amount of land we have available to us.

Insights and Inspirations

  • AgTech robots will help to maximize crops on the finite land that we have.
  • Bloomfield Technologies is renting “inspector” robots all over the world.
  • Mark’s startup is based in Pittsburgh. A few years ago that was unheard of.
Read the podcast transcript here

Eve Picker: [00:00:11] Hi there, thanks for joining me on Rethink Real Estate. 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. When I’m not hosting the show, I’m running my real estate crowdfunding platform, SmallChange.co, where you’ll find impact real estate investment opportunities open for everyone. Or you can learn more about me and catch up on some podcasts at my website, EvePicker.com.

[00:00:20] Today, I’m talking with Mark DeSantis, serial entrepreneur and past Pittsburgh mayoral candidate. You might wonder how these two things come together and we talk about how. Right now his talents are focused on a startup called Bloomfield Technologies. They build robots that inspect valuable crops like grapes, helping to predict crop outcomes and helping to manage crop disasters before they happen. Mark’s robots are for rent all over the world. He’s certain they will help to produce more food on the finite amount of land we have on this earth. And so are his customers. 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 or go to Patreon.com/rethinkrealestate and support us for the price of a cup of coffee.

Eve: [00:02:27] Hello, Mark.

Mark DeSantis: [00:02:29] Hi.

Eve: [00:02:29] It’s really nice to have you on my show. It’s been a while since we talked.

Mark: [00:02:33] Yeah, you bet.  Happy to be here.

Eve: [00:02:34] So you’ve been called a serial entrepreneur and you’re on to your next venture. And this one is an agricultural technology or what we call Agtech. Right?

Mark: [00:02:48] You bet.

Eve: [00:02:49] So, what is Bloomfield Technology all about?

Mark: [00:02:52] Yeah. So we inspect plants and we determine their health and performance one plant at a time. And we do that for the world of specialty crops. So, if you think of all of the, you know, the world’s largest industry as agriculture, as many, I’m sure your listeners know, and within that industry, there’s a category of plants and crops called specialty crops. And those are all the things that you and I buy when we go into a Safeway or a Giant Eagle or a Whole Foods. So think of fruits, vegetables, ornamental flowers. But it also includes things like trees and even cannabis, all those things that are not wheat, rice, corn are speciality crops. That’s the world, two trillion-dollar market. Those crops require a lot of love and attention, specifically from inspection. So there are people who are trained to walk among those crops, whether it be in a greenhouse or a vineyard in Napa, to look at those plants. And they’re highly trained, typically viticulturists, botanists, agronomists, and they walk among those crops, and they examine them. Periodically looking for things that could damage the plant, water stress, disease infestation. But they’re also looking at the health of the plant, determine whether or not that grape is the size they expected it to be at that time of the year. Or those tomatoes are as large and red as they should be given this time of the year and these treatments. And if they see a problem, then they can tell the grower to provide a remedy, whether it’s more water, more light, more nutrients or what have you.

Eve: [00:04:21] So kind of what I do in my own garden, but on a huge scale.

Mark: [00:04:25] Yeah, absolutely. Bet on a massive scale where you’re talking about tens upon tens of thousands of acres. Well, we do that with machines and A.I., with specifically with cameras that are mounted about the size of a toaster and they’re cameras, not unlike your cell phone, they use the same kind of imaging, except they have the stereo lens and their own light source. And you put it on anything that moves. Our growers, we are in 15 vineyards in four countries, as well as a blueberry grow in Peru. And all of those customers have vehicles of various sorts. They mount the cameras on, and they just drive up and down the rows. Image, take pictures of those things and of the crops and the A.I., the artificial intelligence in the cloud does the rest. So they take those images and go through them at the pixel level. And basically the A.I. has been trained to look for all the things that that human viticulturist or agronomists is looking for when they look at the plant, believe it or not. So A.I. has now reached a point, this is my third A.I. startup and that technology, I should say, to give a shout out to Carnegie Mellon was developed over a decade at Carnegie Mellon. Little known secret about CMU is that they’ve been making ag tech robots for 30 years.

Eve: [00:05:36] Oh, that’s interesting.

Mark: [00:05:37] Yeah, little-known fact. So yeah. So that’s what we do. Eve, I’ll tell you one interesting tidbit. Your, listeners may find this particularly, I think it’s cool, but so we do this for vineyards. Some of the vineyards are some of the best known vineyards in the world. So, one of our customers in Bordeaux is Chateau Palmer, which makes the famous Chateau Margaux one of his. You know, we have vineyards in California and elsewhere, but one of the most interesting customers we have is NASA. So we recently got a grant. There is actually a greenhouse, small greenhouse about size refrigerator, inside of the International Space Station.

Eve: [00:06:18] Oh, so interesting.

Mark: [00:06:20] Yeah, they’re growing leafy greens and spices and what have you. And it’s actually a program in NASA called Space Crops. So, think of Matt Damon in The Martian. That’s a real thing. They actually want to grow plants on the moon, on Mars, but also in the ship going to and from Mars because you can’t carry enough food to make the journey. It’s too long. So you’re actually going to have to grow your food on the way to and from…

Eve: [00:06:50] We’re talking x, x, x x, urban, right?

Mark: [00:06:53] Yeah. This is what I was joking with somebody, you know, they call the greenhouse world and the vertical farm world controlled environments. And I was telling somebody other day, we’re doing controlled environments a little different than a greenhouse. It’s one in space. So we’re within two years will be all goes well, you know, we’ll be sending one of our cameras up to the ISS, where it will be in the ISS monitoring the crops in the space station. So pretty exciting.

Eve: [00:07:24] Yeah. So back on Earth. Tell me about like a success story, you know, some crop your robot saved.

Mark: [00:07:33] Yeah, well, I don’t know if we’re there yet. We’re two years old, but we’ve, generally the feedback we’ve gotten and from the growers that, you know, as I mentioned, we’re in France. We have a customer in Italy. Peru and across four states in the U.S. The response is, is the following. The good news is the problem with using people to inspect on plants is twofold. One is, there just aren’t enough of them. You know, you’re talking about, I’ll use an example, a viticulturist, the person who’s highly trained to go look at grapes and vines and everything on the vine, you know, he or she can inspect about a tenth of an acre in a day. And that’s about one hundred and fifty vines, you know, so you’re talking about a very small fraction of of the total vineyard, whether it be a vineyard or apple orchard or orange grove. The other problem with using humans, and this one’s a little bit more, a still larger problem is that, you know, you’re using humans. And you know this from from your world, Eve.  If you gave five inspectors and had them look at the same thing, you know, you’ll get probably five opinions and they’ll probably be different enough to make any one opinion a little bit suspect.

Eve: [00:08:58] So it’s really about consistency, right?

Mark: [00:09:00] Exactly. So you really want to be consistent. And that’s where the machine, the machine intelligence, the A.I. really makes its benefit. So many of our growers have said repeatedly, you know, I now know the condition of my crops, my plants. I you know, I never really knew the condition because you’re imaging in many cases where imaging every single vine on the entire vineyard and knowing its condition as of Tuesday, that’s huge. Yeah, it’s big, big. And so, it’s new and different. No one’s doing this. This is you know, drones are a solution sometimes, but drones have been around. You know, farmers have been flying over crop fields, using sensors, various types for years. And the problem is when you’re up in the air, you can’t see through the canopy and all the fruit and everything. So we are the boots on the ground for the farmer. And growers have had higher yields. They’ve had better yield predictions. You know, that’s a big, big part of farming, as you know, is your…

Eve: [00:10:06] Yeah.

Mark: [00:10:06] And your grow. You want to know how many tomatoes you’d like to have a sense of, you know, how successful this is going to be and and so on. So all of those things are, you know, knowing what the yield is going to be, protecting the crops from damage from disease and infestation, a big one for citrus, particularly knowing when to harvest. That that cannabis is an example that we don’t we don’t do cannabis now. But we did previously some time ago when we first started the company and when I learned about cannabis is if you missed the harvest window by a day. By a day, you can lose 20, 30 percent of the value of the crop.

Eve: [00:10:47] Oh, wow.

Mark: [00:10:48] Yeah, and that’s a plant, by the way. That’s a crop where you’re talking anywhere between one and six million dollars an acre.

Eve: [00:10:58] Wow.

Mark: [00:11:00] Yeah, farming is changing dramatically and A.I. and robotic technology are driving that. It’s happened in the past, Eve. There have been waves of technology advancement in farming. You know, when you think of I always tell people this when you think of technology, the kinds of things that that allow humans to do more things, most of the advances up until the 19th century were in farming. You know, if you think of all the marvellous inventions that have helped humans do more with less and all those wonderful technologies, the vast majority of them been in farming over the last millennia or two.

Eve: [00:11:46] So interesting. Yeah. So this is a really mundane question, but I want to know what the robots look like. Did they look a little different than Rosie on the Jetson’s?

Mark: [00:11:57] Well, you would be disappointed. I can tell you that right now, anybody that’s imagining you know, like the robot butler.  No, no. You would be you would be incredibly disappointed, Eve. It looks sort of like a toaster, maybe more like small microwave with two eyes and a rim around the edge of lights of LEDs. So no arms, no legs that’s provided by the ATV or the tractor. There’s a little antenna sticking out of the side. It does look like a techie thing. I mean, when they show up on the farms, people look at that. And their first question is, what in the world is that thing?

Eve: [00:12:42] So they must be designed, designed to go over a whole variety of grounds, like rocky flat, mushy, buggy.

Mark: [00:12:51] Yeah. These things are, I call it farm hardened. You know, anyone has been on a farm, knows it’s a rough it’s a, you know, it’s a rough place. So we’ve built these things. It’s very robust, you know, pieces of equipment that have been dropped and kicked and gotten dirty and rained on and and so all that’s been sort of designed in.

Eve: [00:13:17] Cool. So I have to ask, how much does it cost to deploy one of these?

Mark: [00:13:20] Yeah. So we charge our growers anywhere, somewhere in the range of two thousand dollars per month.

Eve: [00:13:27] So they don’t buy them, they rent them.

Mark: [00:13:28] Nope. Rent.

Eve: [00:13:29] Ah, rent a robot.

Mark: [00:13:32] Yeah. And that’s, believe or not, there’s a, you know, when people, your, some of your listeners, are in the software as a service phrase that probably a lot of people have heard that. Well, there’s now a whole industry called robots as a service. You’re not selling the technology. You’re just giving them access to it. There’s even something called FaaS now. It’s called farming as a service where you actually have a piece of land, and you think there’s a way to earn some money. A company will come in and be the farming entity on that piece of land. So you’re the owner, you reap the share, the profits from…

Eve: [00:14:16] Kinda like you’re renting a building, but you rent land instead.

Mark: [00:14:18] And exactly.

Eve: [00:14:19] It’s interesting.

Mark: [00:14:20] It’s exactly that. Yeah.

Eve: [00:14:22] So I have to ask, is there a plan for tiny robots, for urban gardens?

Mark: [00:14:27] Maybe someday. I mean, it’s funny you say that. So, what we’re probably going to do someday when we get to enough size, we will make a phone app version of this that will be free. So what will happen is we have cameras, as I mentioned, the hardware that’s to do it at scale. You’re talking about farms of one hundred to twenty thousand acres. But if you want to use it in your backyard, you know, you’re not going to go buy a bigger machine. You’re what you would want, though, is access to all of the smarts. And because cameras have pretty good lenses for small scale data collection, what will probably do is will make the app freely available to anyone who can, you know, wants to download it. And then they can use their cell phone camera and they can benefit from the analytics. So if you have tomatoes and we’ve done, you know, vast tomato grows around the world, we now have, because of the way A.I. works – it’s learning, we now have all that wisdom from all those tomatoes from all over the world. Well, you can get access to that for free through your phone app for your own tomato garden in your backyard.

Eve: [00:15:42] So, you know I, over the last year, I became an avid gardener, something I thought I would never do in my life. It’s a great, great hobby when there’s a pandemic going on. But I’ve been using a plant app to identify plants in case I think they’re weeds and I’m going to pull them out. Extraordinary, pretty extraordinary. So can I be the first one to test your app?

Mark: [00:16:05] Absolutely, Eve. I hereby, I’ll go on live and just right here publicly say you will be the first.

Eve: [00:16:13] I mean, It’d be fantastic because you’re dealing with all sorts of, you know, mildew and moles and bugs. And it’s hard.

Mark: [00:16:22] You know, there’s a. you know, I’ve been in this ag tech now thing for two years, so I know, you know, a very limited knowledge, dangerous amount of knowledge, which is a very little bit. But one of the statistics I learned that really kind of stayed with me is, you know, for those listeners know your population and the world’s about seven billion, it’s expected to grow to 11 billion in the next 30 years. So that’s a 40 percent increase in population in 30 years. And somebody has done the calculation on food production. And what they concluded is that we will need to grow, we will need to grow more crops in the next 30 years than we have since the beginning of agriculture ten thousand years ago.

Eve: [00:17:13] Wow.

Mark: [00:17:14] Yeah, but it’s an even bigger challenge. And the bigger challenge is we’re going to have to do it on less arable land. So, there’s no Iowas or Ukraines left in the world with dense, rich soil left. So we’re going to have to do it on probably less arable land than is available now. And with fewer of the tools that currently are common to farming. The fertilizers and what have you are with all of the requirements for sustainability that are increasingly the case around the world, those tools will be less available. So somehow or another, we’re going to have to get more with less if we’re going to feed the world. So that’s really probably what’s driving this Agtech revolution I commented on earlier.

Eve: [00:18:03] Mm hmm. Interesting. So who thought up this robot?

Mark: [00:18:08] Well, I ,you know, I was fortunate to have met two people, one of Dr. George Kantor and who is a 20 years researcher at Carnegie Mellon, very well known in the Agtech space roboticist and one of his grad students, Tim Mueller-Sim. Tim and George had spent years developing variations of this technology in the field at Carnegie Mellon. In a literal sense in the field. And they had built all the robots that you’re imagining that you want to see, they’ve actually built those. So, the ones that crawl around or can pick a cherry without crushing it, all that, you know, they developed a lot of those things, field tested them and pretty cool stuff. But one of the lessons they learned is, you know, farmers don’t want to buy robots, yet. And that’s, you know, for people that love robots and build robots, that’s tough stuff. But they concluded, hey, look, we still want to help farmers. So what we’re going to do is we’re going to carve out the perception piece of that robot, the eyes and the brains, if you will, the A.I. in sensing and we’re not going to sell that to them. We’re going to sell a service. And we know that crop inspection, especially in specialty crops, is an essential routine in every specialty crop, just the way it is in your own garden. And so they said we’re going to carve that out and sell that as a service. So it was pretty, pretty thoughtful of them to kind of you know, it’s played out that way that the growers have resonated. So, you know, it’s probably the classic example of academic researchers transitioning to entrepreneurs. And, you know, that’s hard to do.

Eve: [00:19:59] And that’s where you came in, right? Because you are a serial entrepreneur.

Mark: [00:20:04] Yeah, yeah. And so when I met them, I came in as an advisor. And I think, Eve, I was like, I don’t know, 20 minutes into their first presentation and I, you know, I said to myself, OK, I’m just going to advise, see what. 20 minutes in, I’m like, oh, I’ve got to do this. So I just like, you know, I just can’t help myself and I don’t regret it for a minute. The two years it’s been I have flown by and I’m thoroughly enjoying this.

Eve: [00:20:35] So how do you hope to scale this company?

Mark: [00:20:39] You know, great question. So that’s the challenge every tech company has when they think of the all the benefits they could bring to the world, but then they don’t necessarily think through how everyone’s going to access this this wonderful tool. And for us, you know, for a lot of entrepreneurs like us, our strategy has been initially to knock on doors. The good news is because this technology had already been sort of field tested, we had a few leads with some vintners in California that led to them trying it and then them telling other vintners. And before, you know, we’ve got 15 vineyards in four countries,

Eve: [00:21:18] So no Facebook ads.

Mark: [00:21:20] No, no Facebook. You know, it’s funny. I think that it’s interesting how sometimes that PR is a startup and I’ve been guilty of this as you can almost get too much. And what happens is you get too much too early. And then when you meet investors or customers, they find out that the hype, you know, of your business is way ahead of what actually is there. So we were careful not to sort of get ahead of ourselves. But one of the things that we’re starting to do now, which is working is, is, you know, people use this phrase partnering. There are entities right now that buy large marketers that buy crops and then resell them to package them and sell them to the Whole Foods, Safeways and Giant Eagles of the world. And they have an interest in several things. One is in knowing that what the yield for that farm is going to be, if the sooner they know that, the better they can price it to the Whole Foods of the world. They also want to ensure that the crop that they’re buying at the beginning of the year is of a sufficient quality at the end of the year as to make that worthwhile. So they have an interest in knowing the condition of the crops, knowing the yield and various other things of the person from whom they’re going to buy those crops. So they came to us and I can’t name them yet. Someday soon, a big, big entity, global entity, and said, hey, we want to pay you to give your service to our growers. They can have access to all the analytics. They can get all that for free because we’re going to pay you and we get the benefit of knowing what the yield is going to be and the quality is going to be from that same data and then we resell it. But then there’s another addendum you’re going to find interesting. And this is new and different. This is very new. So what they’re telling us with this marketer is saying is people like you and me, when we go into Whole Foods or Giant Eagle or wherever we shop, we are increasingly want to know the history of that apple or that pepper, in other words, we want to know, OK, is that pepper really organic? We want to know where it came from. And when we say where it came from in this, believe it or not, this is where it’s going. The grower, the seller, the Whole Foods of the world wants to know what tree that apple came from.

Eve: [00:23:55] You’re kidding.

Mark: [00:23:56] I’m not kidding.

Eve: [00:23:58] I mean, is there a move towards buying more local in supermarkets as well as farmer’s markets?

Mark: [00:24:05] There is an attempt to do that. The challenge with buying local is, and this is some of the issues around some of the larger issues that people are struggling with is it’s pretty hard to compete with a Driscoll’s. You know, which is a massive grower when you’re trying to reach that quality level. There’s just a point at which a small grower just doesn’t have the scale.

Eve: [00:24:28] Yes.

Mark: [00:24:29] To match the quality of a massive grower like a Driscoll. So so there’s that. But there is a desire by the to grow the grocery stores, the places where we shop, to try to at least incorporate some local production. And so you’re seeing that play out. The challenge is we as consumers still demand our quality. As much as we want to buy local, as much as we have a desire to help keep that local ecology sort of functioning business, ag ecology functioning, we still like our quality apples. We still want to want to get the best quality we can for the price. And so there’s a bit of a challenge there for the you know, for the local growers. What’s seemingly happening is and I think this is another feature of just our own preferences as people are fussier and fussier and fussier about the quality of their produce, which is great. And so where there’s an opportunity for the local grower is rather than try to compete at the low end, they compete at the high end.

Eve: [00:25:43] That makes sense.

Mark: [00:25:44] So they go after the really premium crops, the kind that, you know, that I’m not, you know, five-dollar tomato or whatever.

Eve: [00:25:56] Yes. Yeah, interesting, so you must have done the math, because this is what I’m thinking, if everyone deployed one of your, every farm, deployed one of your robots. How much more food could we produce?

Mark: [00:26:09] Yeah, good question. You know, if you do the math conservatively, if you can increase yield just on believe it or not, I mean, the farming is it is a challenging business, whether you’re a giant grower or small. As you know, a lot of resources go into farming in the margins are pretty thin. So that means if you can increase yields, say two or three percent, you can dramatically improve the profitability of that farm dramatically. But that yield increase of two or three percent over time, in other words, you can do that on a fairly continuous basis, can add up to a lot. And that’s where food production is. It’s at the margin. You know, it’s at the margin of getting more with less. And by more with less, I mean, not just with less arable land, but with a lower resource base, less water. Water is now one of the big, big challenges in farming in, say, California, where a huge amount of our specialty crops come from. In the U.S., water is a big challenge. We as citizens of the Northeast United States, believe it or not, ultimately subsidize fresh water availability in on the west western United States. We are in our taxes and in the subsidies that are provided by the federal government to farmers. It allows for fresh water practically from being places like the Columbia River and other places out west to provide water on a massive scale, fresh water to farmers. And that is increasingly becoming expensive. Now there’s issues around the water table and you know, people that are much more expert at that than I am knowing about the depletion of of fresh water in the United States. But fresh water is now increasingly a constraint. So if you can increase yield with data and as a result, target my use of water and even nutrients by and have me use less of those and get higher yields, you not only improve the quantity of food, you reduce the resource cost. And that’s just data, Eve. It’s not, you know, we’re not talking about the labor costs or anything. We’re just talking about the simple use of the data. And that’s really our goal is not only to increase the productivity, the production, absolute production, it’s to reduce the resource base required to produce that.

Eve: [00:28:52] Yeah, interesting. So I’m going to shift gears a bit.

Mark: [00:28:56] Yeah.

Eve: [00:28:57] You know, you ran for mayor in the city of Pittsburgh a few years back, and you, and I know you’ve really been involved in the city, in the startup community. And I want to know what you believe the relationship is between a healthy city and startups.

Mark: [00:29:12] Yeah, that’s a good question. And I’ve thought a lot about that. Eve I don’t think there’s a city in the world that thinks that economic growth is necessarily inherently a bad thing. However, I do believe that a community like Pittsburgh, where there is now, I think, for the first time, I’ve been here 20 years, Eve, and I tell you what’s happening in the last three, three to five years is unlike anything that’s ever existed before. As long as I’ve lived here. It is really exploding. I mean, you have your first big IPO.

Eve: [00:29:47] Yes, Duolingo, right?

Mark: [00:29:49] And you have a few more in the queue. Yeah, that’s insane. So you’re going to see an explosion of millionaires living in the city. You’ve already seen that people who are now have suddenly are flush with wealth. There’s a concern by every city that, hey, is that going to be shared? Is that going to prosperity going to go to just a handful of people or a small elite community in this city? Or is it going to be our other citizens going to enjoy the fruits, the fruits of that?

Eve: [00:30:18] That did not play out well in San Francisco, right?

Mark: [00:30:21] Not at all. And I’ve been there with anyone who’s been there sees the disparity in peculiar San Francisco. You’ve got a beautiful, magnificent city with huge pockets of poverty.

Eve: [00:30:33] Yes.

Mark: [00:30:34] Disappointing. But I think in the case of Pittsburgh, I think it’s thoughtful leadership that doesn’t create a antagonistic kind of, you know, regressive. I don’t believe what’s happened. And I’m not pointing fingers at any politicians here. I think it’s just maybe just a natural outcome, you know, is this tech community grows is increasingly another community or other communities in this city are saying, hey, they’re getting all the attention and we’re still poor.

Eve: [00:31:04] Yes.

Mark: [00:31:04] We still have crappy roads, and our institutions are not working. Our crime is. And so I think that the kind of leadership that that needs to happen is that somebody sort of bridges that that doesn’t create an us versus them mentality, because then when the tech community says, oh, the city doesn’t like us because we’re successful now, they want to make us a scapegoat for their failures as local government. So there’s two sides to that. And that you end up creating, you know, you probably see it for the listeners nationally play out this way is, you know, when it’s really easy to point the finger and say it’s, you know, they’re the source of the problem. And I don’t see it that way. I think it’s a function of quality leadership, Eve, that I sound like giving a speech here.

Eve: [00:31:51] Oh, I completely agree with you.

Mark: [00:31:54] It’s the quality of leadership

Eve: [00:31:55] That, I mean, it’s actually played out that way with the health industry in Pittsburgh, which is really absolutely first class. And there’s been constant friction politically between that community, each other, and the city. And, you know,

Mark: [00:32:14] Needlessly, I think needlessly, I think both care about their community, both want it to succeed. Both have a desire to have everyone as much as possible enjoy the fruits of what’s happening. But I think that is in the details where it gets lost.

Eve: [00:32:30] Yeah, I mean, how did you get here? Like, what’s your background in a nutshell?

Mark: [00:32:35] Yeah, in a nutshell, it’s going to be a big nutshell because it’s crazy, but I’m trying to fit it in a tiny nutshell. OK, I spent the first 14, almost 15 years of my life in Washington, D.C., professional life in Washington, D.C., in and in and out of government, in and out of the federal government. I worked I was fortunate. I worked for initially two then congressmen, one guy named Tom Ridge, which any of your listeners in Pennsylvania would know to me became governor and secretary of homeland security. And fortunately, I worked for him. And then another guy named Mike DeWine, who is actually, now, the governor of Ohio, and that those two experiences were sort of fundamental. I then managed a political campaign in Maine.  A guy we ran for Congress and a fellow named Rollin Ives. That’s a great New England name. And we lost. But I learned a lot about campaigns and came back to D.C. I worked for a Beltway bandit, Booz Allen, that’s the phrase in Washington for anyone listening. So I don’t mean that in a negative way. So big, big consulting firm. Worked for the Justice Department, the US Justice Department, briefly as a policy analyst, and then ultimately got a job working for John Heinz. Senator Heinz, up until tragically he passed away in 91. When the senator passed away, the new senator came in and brought his own staff. So I was again in the market and I was fortunate. Just dumb luck really, got a job in The White House. Got a job working in the Office of Science Technology Policy and under the first Bush administration in the early 90s, so I got a chance to work with an interesting group of people, the science adviser for people who don’t know something called the Office of Science Technology Policy was formed formally became a White House office staff when Eisenhower was President. But but every President since John Quincy Adams actually has had some kind of science adviser. So did that for two years. And President Bush lost. I was a political appointee. So when the President loses, you also lose a job. And so I was out the door and back on the street again. But I am fortunate to have all those wonderful experiences. And I ended up getting a job with Texas Instruments. So, Texas Instruments was looking for a lobbyist, somebody to help run their government affairs in D.C. And at that time, Texas Instruments was a Fortune 60 company in 48 countries and had a lot of business all over the world. So I had to travel, got a chance to travel around the world and had a lot of interesting assignments and it’s a wonderful company. I cannot say enough good things about the generosity of the Texas Instruments. I learned a lot about technology and policy and funny thing when I left, Eve, for your listeners who don’t like corporate lobbyists, they all enjoy this. I had a going away party when I decided to leave that world and moved to Pittsburgh. So I kind of finished that stint when I was about thirty five. I had done all that stuff and I was ready to kind of move on. And they had a party for me at my favorite watering hole in D.C. and they someone gave me a bumper sticker and it said, and these are other corporate lobbyists too, they give me a bumper sticker and it said, “Please don’t tell my mother I’m a corporate lobbyist. She thinks I’m a piano player in a brothel in New Orleans.”

Eve: [00:36:30] That’s great.

Mark: [00:36:31] So anyway, so I got that and then decided I was done. I had done a lot of what I wanted to do there. It was wonderful, but I was done. So I came here right around 2000 and didn’t really have a job. I actually was able to pick up some consulting work locally and then kicked around, got some work done. I was did a little bit of consulting work for Free Markets, back in the day. And I did a little bit of consulting there and that gave me a little taste for entrepreneurship and then really kind of dedicated myself to the starting companies over the next, you know, 15, 16 years here.

Eve: [00:37:15] So, what’s interesting about that is, you know, when people think about startup, they think about some young 20-year-olds starting a company. But you have this amazing wealth of experience that you’re bringing to this company.

Mark: [00:37:33] You know, Eve, I will tell you, the statistics share. I’m also an adjunct professor, at Carnegie Mellon that’s said I want to shout out to CMU. I’ve been teaching here since I moved here and they’ve been wonderful to me. But people if the statistics for those listening or prospective entrepreneurs, statistics are, most startups are started by people in their late 40s, early fifties, believe or not vast majority. It is the, there’s a small fraction of people in starting new businesses that are in their twenties or early thirties. That’s a rarity when it comes to starting businesses. And everyone thinks of the overnight success and…

Eve: [00:38:14] And overnight success is ten years, right?

Mark: [00:38:16] Oh, yeah. I mean, this is it’s a, this isa brutal, I tell people who are contemplating starting a business and, you know, you’ve done it, you’ve done it more than once, and, you know, it’s a brutal taskmaster. It is unforgiving. And it’s…

Eve: [00:38:34] I think I’m about halfway through that ten-year fix, that success on my latest business. And it is completely brutal.

Mark: [00:38:41] Yeah. And it just, but, you know, it’s funny. It’s the kind of thing where as tough as it is. I have a friend, he’s a retired Navy SEAL officer and he’s also an entrepreneur. And he said to me once, you know, he is, you know, being an entrepreneur is sort of like being a Navy SEAL and that you just have to get comfortable being uncomfortable.

Eve: [00:39:04] Yeah. Yeah. OK, I have one more question for you, and that is, what is your big, hairy, audacious goal?

Mark: [00:39:15] Wow. Wow. Oh, my goodness, where do I begin? I just want to make a difference here and in our community and whether that community is Pittsburgh, the region or even the state, I want to make a difference. That’s my goal. I enjoy what I do. I feel great about this company and what it can do. And that’s one of the reasons I love this company, is it’s going to make a difference for farmers, hopefully all over the world. And, but another important goal of mine is to make a difference where I live and try to make as big a difference as possible. And so I think that the great old, grand old, you know, Keystone State that we live in, you know, one of the colonies from way back is seen better days. And I think the communities that are here, you know, we’ve had suffered from population decline in Pittsburgh, in the region and in the state. And I think that there’s a desire to see something better and see change coming. And I think that that’s now possible. You know, it’s not the old, you know, stodgy community state that it once was. I think there’s new vitality, but I think it’s going to take time. And I want to see what I can do to make a difference somehow, some way. That’s what I think is the most energizing thing for me is that it’s why I love startups. It’s a way to kind of cause positive things to happen, keeps me motivated. And that’s what motivates me, is to try to make a difference where you live.

Eve: [00:40:53] That’s a great answer. I feel completely energized now. Mark, thank you very much. Thank you very much for talking to me.

Mark: [00:41:01] Yeah, sure. Happy to be here, Eve. Thanks.

Eve: [00:41:09] That was Mark DeSantis of Bloomfield Technologies. Mark pivoted his life and career from politics into start ups, and he moved from D.C. to Pittsburgh, where he is living his dream, nurturing an ag tech company into a global position in his much loved, adopted city. We’ll be hearing more about Mark and Bloomfield Technologies, I’m sure.

[00:41:46] You can find out more about this episode on the show notes page at EvePicker.com or you can find other episodes you might have missed, or you can show your support at Patreon.com/rethinkrealestate for the price of a cup of coffee. 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 Mark DeSantis, Bloomfield Robotics

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