#249 Why There's a Trillion-Dollar Green Building Boom Happening | Matt Ellis (Measurabl)

Matt Ellis (Measurabl): Building a Climate Tech Empire

Join us with Matt Ellis, Founder & CEO of Measurabl, as he shares how they're transforming the green building industry. Discover how they're leveraging data and AI to drive sustainability, navigating policy, and helping building owners lower emissions. Matt dives into building a billion-dollar climate tech company, the importance of constant reinvention, and lessons in fostering a thriving company culture.

In this episode:

• (01:23) Reinventing Measurabl
• (05:57) AI and Data's Impact on Measurabl
• (15:43) Advice for Climate Tech Founders
• (35:42) Lessons Learned in Talent & Team Building
• (48:41) Emerging Trends in Sustainability Data & Business Models

Connect:

• Matt Ellis on LinkedIn | Measurabl Website
• Connect with Somil on LinkedIn | Connect with Silas on LinkedIn
• Follow CleanTechies on LinkedIn

-----This podcast is NOT investment advice. Do your homework and due diligence before investing in anything discussed on this podcast.

Chapters

• 1:23 Reinventing Measurabl
• 2:39 Identifying Moments for Change & Reinvention
• 5:57 AI and Data's Impact on Measurabl
• 8:35 Sustainability Data as a Material Asset in Real Estate
• 10:27 The Vision vs. Incremental Growth of Measurabl
• 13:57 Measurabl's Impact Metrics
• 15:43 Advice for Climate Tech Founders
• 22:22 The Evolution of Real Estate Sustainability
• 27:39 Technologies Adopted by Building Owners
• 30:06 Bottlenecks and ROI in Real Estate Sustainability Adoption
• 33:13 Sales Advice for Real Estate Owners
• 35:42 Lessons Learned in Talent & Team Building
• 41:02 Shifting Company Culture with Growth
• 46:52 Finding & Retaining Talent
• 48:41 Emerging Trends in Sustainability Data & Business Models

Transcript

Silas Mähner (00:01)
All right, Matt, welcome to the Clean Techies podcast. How are doing today?

Matt Ellis (00:04)
Life is good. Thanks, Alice.

Silas Mähner (00:06)
Glad to hear it, man. It's just for me, it's getting very nice because Wisconsin in the summer is one of the most pleasant places in the world. Unless you're in a mis- Nice. Very nice, man. Well, for people who do not know you, which is probably not too many, give a quick intro on who you are and what you're building.

Matt Ellis (00:12)
I got you only slightly because I'm in Telluride, Colorado, but only slightly.

Yeah, sure. So I'm Matt Ellis. I'm the co-founder and CEO over at Measurable. Measurable is a sustainability data management company, technology company focused on real estate. So what we do is we help real estate owners, lenders, and a whole variety of other real estate stakeholders measure, manage, report, and ultimately act on sustainability. So it's things like carbon emissions, physical climate risk, and a whole other set of considerations. And we've been at that now 13 years.

in our business since inception. And today we're the most widely adopted technology company of our type.

Silas Mähner (01:00)
Nice. Yeah, you guys have really made a sort of impact or you've established your name very well in the space. Nobody has not heard of Measurable, at least to my knowledge, and I've been in this space for a while. So that's good stuff. I'm sure you've given the story of building Measurable on other podcasts, but would you mind just giving a couple of the highlights of the experience of building any core moments that you like to reflect on?

Matt Ellis (01:23)
The fact that you keep rebuilding it. That's the amazing part, right? So everyone fixates, I think, on the founding story. And I think we have a great one, which began at CBRE and my time in real estate brokerage and traditional real estate, but also my personal interest in sustainability and the chance to bring those two things together and start a company around that. But we've reinvented measurable probably a handful of times, not every month, but every few years. For example,

about three years ago, we recognized the need to go from a more monolithic product experience to a multi-product platform. So serving not just real estate data management and reporting, but also things like real time data and buildings to help them better optimize day-to-day operations and reduce carbon and energy consumption. So getting from one to many was a big deal, right? We reinvented it again when we realized that real estate wasn't just debt and equity. ⁓ Sorry.

brick and mortar, also debt and equity. And that meant we had to also address real estate lenders and their considerations around lending to real estate owners. going through those different milestones, each one was a moment of reinvention or re-imagining. And I know that we have even more coming for us. So I think that part is like, it's always restarting. That's the big thing here.

Silas Mähner (02:39)
⁓

So how do you identify then when it's time for a refresh or effectively? Because I can imagine that in the early startup phase, you're just kind of pivoting a lot trying to figure out what's product market fit. But once you've got something going, I can imagine there's a bit of a hesitancy to accidentally break it all, right? And if you do restart...

Matt Ellis (02:59)
Look at the greatest companies in the world and what do they do? They are the first ones to disrupt themselves. Bill Gates from selling floppy disks to go into cloud and internet, selling licenses. Obviously Amazon from retail to AWS and many, many, many, many, many other stories. The stories we don't want to be are the companies that don't change.

Those are the stories that are scary and intimidating and you don't want to be in the history book of those. How do you identify those moments? Sometimes they're external, right? Sometimes it's like, hey, guess what? There's this thing called AI. It's going to eat software and completely change the way we all do business. I think those moments are sometimes incredibly obvious and many people react and lockstep to them. Others are more maybe niche to that market that you compete in.

So for example, in sustainability, the initial technology concerns were more around acquiring data and reporting that data. But today it's substantially based on outcomes. ⁓ What actions did you meaningfully take to improve the existing building stock that you got, i.e. make it more profitable? ⁓ That's not the same thing as solving just directly day in and day out for carbon emissions or accounting form and reporting form, right? So I think you got to look like, are there secular external events?

Are there market specific facts the way that it's evolved? And then there's ones that are internal to the company, right? Like did your tech stack also FI? Do you need to go to a new modern front end? Are you going to rewrite the whole code base and, you know, legacy products while you're at it? These are the types of things that maybe force a company to change. I think the blend of all three is where the sweet spot is. Can you see that all three of those are almost necessarily always moving and

when you get a combination of maybe one moves a little bit, another one moves a fair bit, and another one moves a lot, the combination of those is probably when you're gonna see a business have to adapt.

Silas Mähner (05:00)
Do you have any specific methods that you employ to ensure that you're keeping an eye on when those times are changed? Because think famously, Bill Gates, you mentioned already, does, I think it's like a reading week once a year where he just spends a week reading. Do you have anything like this where you take time to reflect to be able to identify those moments?

Matt Ellis (05:18)
I drove six hours from Denver, Colorado through the Rockies with no cell reception and contemplated the results of AI in our business and how important it was to compete on data, right? Not features and functionality. So no, don't have like a method to the madness, but I think it's just trying to get some space and some time to reflect, right? Everyone's so busy doing what you do every day. Just ask that simple question, which is,

Silas Mähner (05:22)
You

Mm, yeah.

Matt Ellis (05:45)
How often did you take a break and actually think about the business as opposed to work in it?

Silas Mähner (05:47)
Mm.

Yeah. Can you talk a little bit more about what AI means for measurable? Again, you've alluded to this a few times, so I'm curious to dig in a bit more.

Matt Ellis (05:57)
Okay, let's look at it first base, just the data, right? So we know AI is clearly a powerful tool. We've all had our experience with Chat GPT. We're seeing whole businesses rise out of the opportunity set that AI presents. Those are things like back of the house, like being more efficient in how you deliver your business value proposition, improve margins, their new features and functions. But underlying all of them is typically one common denominator, which is data.

Does the business actually then have any proprietary or unique data? Because if you do, if you have proprietary, unique, and ideally valuable data, then you can apply AI on that to express it in really exciting ways. The first part is, I think, the most interesting and challenging. So let me maybe make a blunt ⁓ analogy. If we all suddenly had hammers, we could all do that work.

But I wouldn't necessarily be able to do that work any better or differently than you. What would make us different and better would be in this case, proprietary and advantage data. Now look at measurable. We are 13 years into granularly measuring the sustainability performance of real assets at the space level, at the meter level, across a whole range of metrics, not just utility metrics, but CapEx considerations and projects.

⁓ occupier behavior and so on. That's interesting. Further, we've taken that data and actually turned it into real deliverables that are commercial. For example, we have a partnership with the London Stock Exchange to provide the data behind their FTSE Russell, EPR, NAIRT, big name, green index. So we know we can not just do we have data, but we use that data in a way that's compelling and monetizable, check, check.

Silas Mähner (07:44)
haha

Matt Ellis (07:55)
now then wield a superpower that is new to the whole world or relatively new to the whole world and apply it to that data. And I think you got an exciting outcomes there.

Silas Mähner (07:55)
Mm-hmm.

So in this case, was more so you had the information, you had the data, but you just needed the opportunity to take AI to apply it to that and then to see how you could also monetize it from there.

Matt Ellis (08:16)
You got it. And the first part's the key piece I don't think we should forget.

Silas Mähner (08:19)
Yeah, exactly. Now that's interesting. guess, does it really matter if you have comparable data or other people are going to aggregate it? They're going to buy it from somebody else to get kind of access to a non-sustainable buildings while you guys can present the sustainability buildings data? ⁓

Matt Ellis (08:35)
So yeah, that's right. Like our specialty is sustainability data, right? Not ⁓ leases and things that a yardie MRI and Trada real page would deal in. It's a new class of data, right? And that new class of data, let's say we're in our first decade of that being considered material. That's the key word. It's not just a luxury. It's an imperative in how we transact in real estate. So things like

regulatory exposure for fines and penalties around carbon intensity are material. Things like therefore energy intensity, so I can tell whether your building is an under or over performer relative to other buildings is material. Things like physical climate risk exposure, flood, hurricane, wildfire are material to procuring and affordably procuring insurance. Once you have that moment where it's like I have a new class of data,

it's actually meaningful in real estate transactions, then you're onto something pretty exciting because you can apply that data to out-compete. And that's where the market is now turning to. How do I out-compete with my sustainability data as opposed to merely report it?

Silas Mähner (09:42)
Mm-hmm.

Yeah, that makes a lot of sense. think it's always been the dream that if people can understand the benefits of sustainable buildings, that they'll just go a little bit more headlong into this to adapt to more greener circumstances. I do want to ask, as the company's grown and now you've kind of unlocked, let's say, revenue model, if you will,

Was it obvious that some of these things would come up down the road to you when you started building this? think, hey, I know there's something here. I don't know how it's going to look, but I know. Or did it come up, of hit you out of nowhere in the future? Because I'm always fascinated by this idea that people think at the beginning, hey, I can make 10 grand a month doing this. And then before you know it, they've built a billion dollar business.

Matt Ellis (10:27)
Right. Some people are incrementalist, I suppose, and are happy to start with where they can make money and figure out how to grow from there. I'm a big fan of that approach, right? Like if you read Eric Ries' books and think about minimum viable product and incremental improvement, I think there's just infinite wisdom there. I think there's visionaries too, right? Folks that said, I see an iPhone here when there was nothing before like it.

To the extent that we have vision in our business, think it certainly was that sustainability was not a silo. It was going to be deeply integrated into real estate transactions. mean, the lease would be the green lease, the loan would be the green loan, the bond would be the green bond, and obviously the building is the green building. And that that prefix green meant fundamentally that we would have an objective measure, right, to say where it was on the scale.

relative to other assets like it. That was a good insight. That was saying, we're not seeing the whole picture of what makes the best possible transaction, the best possible underwriting. And to get that bigger, better picture, sustainability had to come in. That wasn't, I think 10, 13 years ago when we Received Religion, it was maybe more an idea or a hypothesis. I think today we can say that's proven to be the fact. Next question is how scaled can it be?

Silas Mähner (11:47)
Mm-hmm.

Matt Ellis (11:52)
Measurable is now 20 billion square feet into our venture measuring and helping improve real estate transactions. 20 billion square feet sounds like a lot. It's not, right? This is a multi, multi trillion dollar asset class, 40 trillion in the US alone. We represent in totality about three. We're not even 10 % even at our scale of the US opportunity set. Now scale that out globally. So we really haven't found

anywhere, anyone in our industry, a true sense of scale.

Silas Mähner (12:23)
Yeah.

Yeah, so there's no need to go seeking new markets when you still have plenty of marketing to do.

Matt Ellis (12:29)
Yeah,

not new narc is necessary. We'll be in the real estate business for a while, but I think we'll have to find new ways to go to that customer and help them improve the transaction. You mentioned earlier about the data and making that available. I agree, but making it easy is even harder. I still haven't made it easy.

Silas Mähner (12:33)
Yeah.

Yeah.

Yeah.

And then just to clarify for people, they kind of get, if they're not familiar with this market, what you're suggesting here is that when people want to buy a building or they're trying to finance a building with debt, there are now filters that people are looking at the sustainability metrics to see if that's going to meet their lending or their purchasing requirements. And also in some cases, probably fit their thesis around returns. Just so people understand, did I get that kind of correct?

Matt Ellis (13:17)
Precisely right. I mean, very specifically, think of an underwriting model where you're into consideration, you know, handful of metrics. And I mean, like specific discrete metrics, right? What is the sustainability, specific discrete sustainability number that you use? One or more of those things. ⁓ That is the place that we're playing ball today. ⁓ A good example of that is the partnership we did with Prequin, a private markets financial platform.

and we provide them sustainability data and real estate so that folks can come and understand as they're evaluating real estate investments, have an additional lens or additional set of metrics that they can use to make their decisions.

Silas Mähner (13:57)
Yeah. And we glossed over this, but I'd like to, given that you've been at this for a while, what are some of the metrics that you guys can share in terms of how you've achieve sustainability outcomes?

Matt Ellis (14:11)
273 is one number, 273 million to be exact. And that's as of year end 2024, the metric tons of carbon that we have measured through our platform. Again, like it's the old adage, can't manage without measure. So we're very proud of and focused on what information was not previously being documented, recorded accurately, transparently represented.

Carbon is certainly a big one. We talked about the 20 billion square feet. Again, it's a big, it's an actual percentage at least of the North American market and we play ball in North America and Europe, ⁓ largely as well as in Asia Pacific. So it's a real number. ⁓ Another number would be the three trillion number, right? So we talked about having an actual percentage of the asset value that people are investing in. So these are different.

some financial, some sustainability numbers that we can use to say, we having some impact? Are we making some headway here? Are we in the hundred billions of feet, which is nice, but not impactful? Or are we in the trillions of dollars, in which case it's a different league? And I think we can say firmly we're in the latter. But again, as we put it out, still a long way to go.

Silas Mähner (15:25)
Mm-hmm.

Yeah, exactly. Now that makes a lot of sense. So not many people have got to this stage. So can you talk to the founders, the other climate tech founders who are listening about what it takes to succeed in the early days versus now as you guys have matured and you're growing?

Matt Ellis (15:43)
man, do we have like 10 hours or do we have 30 minutes, right? So the only difference that comes to mind in the climate space, right? Or the sustainability space that I would offer up versus like an entrepreneur in any other segment, right? I think every entrepreneur has to have grit and determination and passion and all those things. I think in climate, it's really, really important to make sure that you don't miss

Silas Mähner (15:46)
Thank

Matt Ellis (16:13)
the forest for the trees, and I hope that pun comes off as somewhat ironic but intentionally, because we do tend to solve too much for the tree when the forest in this case is actual yield from real estate, money. We need to make sure as climate entrepreneurs, we keep coming back to how our customers make money. About three months ago, I saw a post from another climate entrepreneur who was talking about a change in regulatory policy in Europe.

And they were saying, look, this is really devastating to our sector. We have been counting on, you know, this regulation to give us a business case. And I was like, I think that that's where the miss is. The inherent value of sustainability and doing the customer's business better to make the money, save the money, whatever, that is the business case. That's the business case. So if you're focused on solving for compliance or audit, I'm not saying those aren't, you know, important.

but frankly, customary things that you got to do. Do them well, do them fast, do them cheap, frankly free. But if you can change the customer's business outcomes, like how they make money, now you're cooking with gas. That's what we really want to make sure is climbing on shores that we stick to.

Silas Mähner (17:28)
Yeah, so then I guess is your take then you had that in mind as you began and then you kind of just work towards it or did you have to learn along the way?

Matt Ellis (17:37)
For sure the latter. mean, the original ⁓ premise of measurable was that, hey, green real estate is a thing and it's the world's largest asset class. Actually, it's a little bit better than that. We said, look, it's the world's largest asset class and the largest single contributor to GHG emissions, the so-called 40%, slightly less than that in actual fact, but that number still holds up. When you see two things like that come together, you're like, wow.

this is a big opportunity. So we knew that there was something to be done there. ⁓ But I think the piece passed, just measuring that is what we've been talking about the last 10 minutes or so, which is like, that's a starting point that is not the ending point. So we knew where to start, but we didn't know where it would take us, I suppose.

Silas Mähner (18:29)
Yeah, that makes lot of sense. guess one thing I'm going to ask you to reflect on, because I happen to have a little bit of an inside story for you, is when you are early on in the company, I'm pretty close friends with Sandra Toskey, who has actually been on the pod in the past. And she shared that early on, we could talk about this in terms of culture and team building, but even when you guys didn't have money for bonuses, you kind of gave vouchers to everybody for dinners, for a holiday party.

And that made a lot of impact to the team. You want to talk a little bit about that mentality or some of the other stories from that time?

Matt Ellis (19:02)
You know, first of all, what an amazing human being Sandra is and incredible talent and hard worker. And like me, she came out of CBRE. ⁓ I think you're asking about culture and how to build that. I think it's a really tough one. ⁓ You know, I came from athletics background. I believe very much in like team camaraderie, no individual wins, collective wins. ⁓ But trying to acknowledge when people score goals saying, hey, high five, I saw that you did that.

Right? So whether you give a voucher for dinner ⁓ or you give some equity or you simply give a shout out, like you got to do, you got to celebrate people and, and the accomplishments on the way to the greater goal, the top of the mountain. ⁓ And so our style has always been to try to do that, to give some acknowledgement somewhere, somehow. And if it's a bottle of wine, great. It's patting back or high five. Also welcome. ⁓ If it's a fundraise. Right.

It's a bonus. These are all the right things to do.

Silas Mähner (20:02)
Has any of this, I guess, changed for you as the culture grew? Because I can imagine, I've worked mostly at small companies where it's really tight, ⁓ tight-knit at the beginning and you're building things, but as you grow, I imagine it changes a lot. So how have you had to adapt to kind of the culture piece and the team building as the company has grown?

Matt Ellis (20:20)
⁓ There is the idea of think of a band and there's, ⁓ you know, a kick drum, right? This guy playing, hitting the bass. And you've got to be on tempo and it's got to be loud and clear and consistent. And that is really easy to do when everyone's in, one room ⁓ to speak up consistently and repetitively on whatever the point of the day is. But when you get farther flung,

⁓ go to remote work like we've embraced, that kick drum gets diluted, right? It gets harder to hear. So you really have to pay close attention to what is the core couple things that we're working on right now? What will happen when we do those things? What are the benefits we're seeking in particular for our customers? And not over complicate the message or the set of actions the company is working on.

at the company level, right? I'm not talking about going down into the different departments and then at the individual level, but for my job, right? It's really just the twos and threes of things that we want to focus on for the next three and six and 12 months, bearing in mind always one simple long-term objective, right? Which is sustainable real estate for us.

Silas Mähner (21:37)
Yeah. No, ⁓ I don't envy that shift that somebody has to go through as a founder to go kind of from being in the trenches with all the specific nuances and then having to kind of pull yourself out to work on the larger side. But I love the analogy there, the kick drum. I also played drums growing up, so I appreciate that. I can't say that I was always on tempo though. ⁓ But let's talk a little bit about the...

the overall market with real estate right now. So I would appreciate it because you are more qualified than many to give us kind of a snapshot of what's it like in real estate right now when it comes to sustainability. Are they still thinking about it? Has there been a lot of ⁓ dilemmas that they've run into to adopting these kind of metrics and ⁓ these new technologies, et cetera? Just give us the rundown.

Matt Ellis (22:22)
⁓ It's incredibly difficult. I think we're at another moment that looked more like say 2011s and 2012s were kind of climbing out of the financial crisis, businesses getting back to being fun again. ⁓ And, you know, we had not succeeded at that time and really well defining quote green. It was not.

transactable was not metric level, it was not objectively, it was not comparable and so on and so forth. So nice idea, but there was a lot of work to do to get consensus around a set of objectives, how to measure them, how to compare them and how to transact on them. That was called roughly a decade plus of work that everyone put in to standardize and get to some level of fluency and build the capabilities in the different businesses. So now when you walk around,

and you talk to a multi-billion dollar REIT or asset manager, they're gonna have some capability and fluency around sustainability. That was not true 10 years ago. think today, we have to face a different set of crises, ⁓ not one of consensus, but one based on like policy adversity, right? So very obviously in North America with Trump, we don't have a favorable policy environment. We in fact have headwinds.

⁓ It's not just that there's like not policy support, but there's actually policy antagonism. It scares business leaders. It has led to this phenomenon like green hushing, for example. So I think that's very difficult. Again, you have to look back to the business case. I don't care about all that. I just want to make you money and making sure it's very clear how we could do that. The second part is ⁓ the past policy is macro, right? It's like

elevated, sustained high interest rates. The business of real estate is tough. People are giving buildings back. There's some bankruptcies. There's just friction, right? It's harder to do everything. We want to try to flip that one on its head and make sure that we present technology as a solution to making that easier, faster, cheaper, so that you can continue on with your business. So I think like in the green sustainability world, you have to recognize like there's a couple big adverse

Factors at play, they're not just North America. Europe has had its EU omnibus rollback. It's very significant in terms of reducing scope with the companies that are being regulated. ⁓ I think we've overindulged in awards and platitudes. And behind all those is like, what value did you create for me lately? And if you're in a business and your CEO asks you that and you don't have a good concise answer, you're in a lot of trouble. So these are some places I say it's very tough ⁓ to...

get past those facts and then grow a business. But I'm optimistic because every time, like we came out of a very difficult period when there was no venture capital for sustainability and green tech. In fact, the 1.0 climate tech thing ⁓ with like hurrah and clean tech biofields companies and coastal ventures killed people, right? It was a bad experience. So when we came out, we had a lot to push through to get funding.

and to even recruit people around this. I think that that ultimately is good because it makes you better business, right? Make sure people are dedicated and focused. What we'll go through next, which is going to force business model innovation, AI and data technology innovation, will ultimately make the sustainability cause and business better. But you got to be ready to go through real pain. We've been through that multiple times. And I look on the other side of it and say, you know, let's go through the fire and get to their side.

It'll be good.

Silas Mähner (26:12)
Yeah, it's interesting. Just a sidebar, I just thought about this is the when there is a whole bunch of force change with AI, for example, it might be easier to get other change in there that wasn't necessarily force, but they're already changing anyway. So they might as well be open to considering a greener method of doing something. So it worth noting for any people as they're building in this next ⁓ shift, if you will. ⁓ I want to ask you about

the technologies that buildings are adopting, so building owners, because I was always fascinated, I guess some of my favorite guests on the show have been companies who came up with really interesting innovations for buildings to make them more sustainable. What are the big winners that you guys are seeing other than energy efficiency ⁓ softwares? What are the big technologies you're seeing that are getting adopted?

Matt Ellis (26:59)
Maybe I can break that down into a couple of categories, right? Like if I got you right, we could talk about hardware, like hardware innovation and buildings is really important. ⁓ Better building envelope, smart glass, variable fan drive, enhanced lighting, like smart buildings, generally speaking, occupancy sensing, whatever, right? Going in and actually kind of intervening in that individual building and optimizing it. And yes, typically around energy.

tenant experience and tenant comfort, which can relate back to energy consumption and therefore carbon emissions. Obviously power production, on-site renewables, making that more feasible to deploy, geothermal, whatever. So there's like a whole wing that I'm really impressed. I actually think I'm on a podcast like this at some point, kind of saying, you know, we have all the existing hardware technologies we need.

what the challenge is, is deploying that not just to one building, to portfolios and back to that scale issue. I'm probably wrong about that. I probably think that hardware innovation and renewables and power management have tons of room to run and can have dramatic, dramatic, exciting results. My worry has always just been the capital deployment cycle in real estate. It's not every day that I can come into a building and change it.

there's just these tenants in there. You usually look for a few opportunistic moments when it's bought or sold, or you're doing a major refurbishment, and those are your shots. It's hard to otherwise change something. So the problem is, how do I get orders of magnitude of change if that's my day-to-day reality? So that's why I've always looked on the second category, which is software data AI, like software technologies. Those have this immense scaling potential. ⁓

But are we able to actually change building operations easily and directly? answer is, it's harder. So you need to combine these two. ⁓ Software presents the chance to measure its scale and to manage its scale and to change real estate transactions, which change incentives. But hardware helps us actually carry out the operational changes we need in a building to improve its sustainability profile.

I don't think anymore we can have just one without the other, we're to have both. ⁓ And I think that's still incredibly difficult not to crack and to take it again past millions or even billions of square feet.

Silas Mähner (29:35)
⁓ Yeah, and I think that makes a lot of sense. I appreciate that you're breaking that down because we can't, we need to build physical things. We can't just make the world sustainable just with software, right? ⁓ So that's a helpful perspective. I am interested to see if at some point the interest rate situation gets better, if it accelerates this. I don't know if you have any takes on this, but do you have any kind of understanding of what the core bottlenecks are that would really get real estate owners to adopt more green technology?

Matt Ellis (30:06)
Yeah, so I think there's an unlock here. It's a great question, Silas. What really are our barriers? And you might have historically, and still to this day, you get online and you just read a lot of stuff about why sustainability is good and great. And I kind of look at it go, oh my god, are we still here arguing for first principles? That can't be the case. I think actually the unlock is the ROI of sustainability.

We can work on that both on the return and the costs. I'm going to focus actually on the cost side. I think it's too expensive and hard to do. And I'd like to see us work on that. I'd like to see sustainability become easier, more digestible. The metrics that the pain that our customers go through to prove to their auditors that this is a true utility bill statement or reading. You know, it's just like the amount of energy that goes into that cycle is

is astonishing. We need to lower the barriers and the costs of doing the work of sustainability so that relatively speaking, the return is enhanced. So all things being equal, if we can't change the interest rate, then at least make it easier for me to qualify for and comply with the covenants of my green loan. So I'm just talking about a dynamic of ROI where

I think there's a lot we can do on the cost side and with business model innovation especially, so that the relative return of sustainability is enhanced. think that's the unlock. Maybe the lever that we can throw is more on ecosystem. So it is still too hard to share consistently a set of sustainability measures that are generally understood and

applicable whether in appraiser, lender, equity investor, pension fund, never. So it's this good old like ⁓ tower of babble moment where like if we're all speaking too many different languages, like you just get massive friction. Right. So I think if we can have an ecosystem of real estate stakeholders ⁓ unified around a single source of truth for data, a common lexicon of a few KPIs, then we will all be much, much, much better off.

So those are the two. think we've got to make the cost of doing it lower and then make the benefits in terms of using that information make the friction there lower as well.

Silas Mähner (32:38)
Interesting. So I just want to back up on one thing that you mentioned there was that some people have green loans and to comply with those, they need to do certain things. Maybe there's not much else I need you to add there, but just keeping in mind for other founders listening, if you have a product that is related to real estate, you might consider looking into this to ensure that you can kind of help them get over that hump, maybe get through the initial sales process. One thing on sales actually is since you guys have worked with real estate so much,

What is your, I guess, core advice on how to sell to real estate owners?

Matt Ellis (33:13)
patiently. ⁓ So check this out. We look at real estate and again, we're talking about, wow, world's largest asset class, multi-billion dollar portfolios. How large question for you, Silas, how large is, pick your average 20, $30 billion real estate asset manager. How many employees are in that business? Yeah. 20, 30, 50, 100.

Silas Mähner (33:14)
Ha

My guess would be like 20.

Matt Ellis (33:42)
Maybe a few hundred for the biggest out there. ⁓ are, if you looked at like a government classification, small to medium sized businesses. So there's this funny moment where like, wow, it's such a big organization. And that would be true of the asset value, but not of the actual head count ⁓ and ⁓ capabilities of the underlying operators. So being really sensitive to how pressured.

the real estate property manager, the asset manager and the portfolio manager actually are, and truly being empathetic is key. Another way is to make sure to approach them as a real estate professional, not a sustainability professional. So when I talk to my peers out there, ⁓ I emphasize peer, right? I say, look, I have been in the real estate business. I've collected commissions off leases. And I've always looked at this as a profitability first. ⁓

moment. I just want to talk about how I can use technology to, again, better balance that ROI. So it's a really nice achievable ROI for you. These are a couple, I think my tips is one is ⁓ recognize that these are not, you know, corporate giants with big IT departments. Secondly, to really please approach it, approach them for who they are and what they do, which is drive returns from debt and equity by

deploying it into brick and mortar.

Silas Mähner (35:11)
Yeah, that's a really good point. think also the friction of the product or the friction of implementation needs to be super minimal, especially if it's a small team. They simply do not have time to be project managing. A lot of this stuff, they're going to need to make it very straightforward is my assumption because I can imagine, I don't know a whole lot about how real estate family offices are run, but

I get the idea that they're trying to be very efficient. That's whole reason they're in real estate. ⁓ So not going to have a lot of extra staff just sitting around. I want to shift a little bit to talent. Talent's obviously my favorite thing as a recruiter. Measurable has built a really strong brand. So I'm just curious, as you look back on the years, what are some of the biggest lessons that you learned from a talent perspective that you'd want to share? Positive or mistakes you made that you want to share and help others avoid?

Matt Ellis (35:42)
For sure.

Yeah, work backwards from the role, not from the person. So I've made the mistake where I've seen some amazing people. So like, I got to hire you, you got to come work for us, right? You have an incredible skill set around this, that, or the other. Did the business actually have a role for that? Did the business have a need? Was there a well-defined set of responsibilities? ⁓

This shows up in everything from how you compensate that individual to reporting structures. So I've made the mistake of hiring folks who are individually exceptional, but it's like there's a team here, right? There's a machine and they have to have a place in that thing. So again, you're a drummer, I'll skip the music analogies, use the sports analogies and athlete background.

And ⁓ even Michael Jordan and a team of nobodies won't be successful, right? We know that, but it's so tempting to still hire that exceptional player. So I just want to call out, like, make sure you work backwards from what the authentic needs of the business are. ⁓ You know, really ask a lot of questions. ⁓ Any reference that they give you is next to useless. You got to do your own homework. ⁓

Silas Mähner (37:29)
How do you recommend doing that?

Matt Ellis (37:31)
Call the people that they're affiliated with on LinkedIn, reach out to people that are on LinkedIn, ⁓ ask them for, say thank you for these references, give me three other ones, right? Force them to at least make the extra effort. Otherwise you're just gonna call their best friend from their prior job and it's not gonna do you lot of ups. ⁓ Make sure to ask the hard questions with those references, like would you hire this person again?

And if you were not to hire them, then why not? What would be the reasons for that? So just try to find, I think, some better questions to ask and some harder ones. ⁓ those are a few, right? Work backwards from the business, ⁓ ask a ton of questions, take your time. I've heard this, I'm sure you have it, right? ⁓ There's like slow to hire fastifier. I've heard slow to hire. ⁓

Slow to fire, right? Like make sure you understand what's going on with that individual. Is it the right individual, but in the wrong position in the business ever? It's disruptive to let people go and to bring them in. You know, I think the slow hire for sure holds up. That much I know. The rest of it I think is very circumstantial and specific to the business and what's going on with that individual.

Silas Mähner (38:48)
Mm-hmm.

Yeah, I fully agree with this a little higher. think people are often in a rush and I get the need to move quickly, but in almost every case, especially in these past couple of years, I've seen companies succeed better off with nobody in the seat than having the wrong person in the seat because especially when you have a limited burn, if you're selling to a tough market, you only have really one shot at getting your sales team especially to sell correctly.

Matt Ellis (39:06)
yeah.

Yeah, I agree

with that. mean, having the wrong person in front of a customer is not just like, say it's a salesperson. So like it's classic, like just your job is revenue generation. If you wanted to reduce it to that simple, a simple number. So imagine you put the wrong person out there and they're not able to generate the revenue. Is that the only cost actually? Again, forget the replacement costs or anything like that. It's not, it's the dissatisfying, it's a poor experience.

that that prospective customer has, who then goes on to talk about that poor experience next to the next. So you gotta really appreciate like putting the best athletes on the field and in the roles and getting that right, the exact opposite happens. Even if they don't end up buying from you, they can say, I had a very good sales experience. I thought I understood the products very well. For me, maybe not a fit or not at this time.

Silas Mähner (39:47)
Mm-hmm.

Matt Ellis (40:09)
However, I'd certainly recommend you give them a look. And that's all we ask. what we want, right, is the opportunity to win on our merits. But if you don't have the right folks out there representing the brand and the products, you might not even get that chance. That's the worst outcome.

Silas Mähner (40:23)
Yeah. When you're building a very early stage team at the very beginning, usually the kind of people who are going to come work with you are supervisionaries. They love the startup culture. They like things that don't necessarily always have structure. But obviously as the business grows, you need to kind of shift away from that and you need to get things a little bit more standardized. I want to ask for a couple of questions along the lines. First of all, at what point in the business you can use the revenue or series, like what series funding it was?

did this really begin to shift where the early stage, the first kind of team members you hired began to become disinterested because the company was growing. It was too big.

Matt Ellis (41:02)
you know, 10, 15 people, some people are very like some, some people, and I think I might be in that camp after like, really, ⁓ there is an, ⁓ I would wish for anyone to have Christmas every day the way that I did when it was just you and a couple of pals, right? Figuring it out in the spirit of camaraderie and innovation and all those things, right? And every win was yours and every loss was yours. There was no one else to blame, all those things. ⁓

That's like a magical, you know, it's a magical moment. Some people really want that and don't want what comes next, which is standardization and process and, you know, pick, you know, change is more on a half annual or annual basis as opposed to every day and every week. So I think it's a very personal answer. We know the direction of travel on that one, right? Which is as the business grows and becomes more successful, you're gonna see.

Silas Mähner (41:49)
Mm-hmm.

Matt Ellis (42:01)
departments form and leadership and performance reviews. Those are inevitabilities. ⁓ Can we have a little bit of best of both worlds? I think so. I think there's moments to call on those animal spirits. For example, at Measurable, we still do skunkworks. We still do special projects. We still grab a few people and say, beat up the strategic plan and come back to us with a complete 180 on it. ⁓

Silas Mähner (42:04)
Yeah.

Matt Ellis (42:31)
That's cool. It's fun. gives you an environment to try new hypotheses and experiment, whereas the rest of the business can kind of keep doing what it's doing on normal day-to-day basis.

Silas Mähner (42:42)
Yeah.

Now I like that. guess, is it, so it sounds like it comes down to the individual to an extent, but as you went through that growth period, what was your general approach to it saying, just sit down with them and say, hey, what do you want in the long-term and can we find a way to make that for you? Or is it going to have to be that we just understand that at some point this is not going to be the fit for you?

Matt Ellis (43:04)
You know, I don't think we've done a great job there. Like HR at measurable was a later invention, you know, and I think that ⁓ I wonder what other companies would say about this. ⁓ It's when you have to run payrolls and have benefits and like these things, I need HR now, right? And in fact, like HR isn't okay, fine, you can do those things, but it's to ask that type of question. And not just to ask that question, but to like,

Silas Mähner (43:22)
Hmm.

Matt Ellis (43:30)
write down the responses and give you a matrix or some way to think about that, right? To pulse check that and do that on a repeated basis. So it has to be thought of, I think more as an ongoing dialogue where the company is checking on health and engagement, setting expectations, but then asking the questions of where do you want to go? And I think like sometimes being clear, like we don't have that here or we don't anticipate having in the near term.

Silas Mähner (44:00)
Mm-hmm.

Matt Ellis (44:00)
⁓

Should we talk about a different path, which is for you to leave the company and try to, can we help you find it somewhere else? I think there's mature and good ways to help it, but like not having a mechanism in the business like HR to own that ⁓ is the only mistake you can really make.

Silas Mähner (44:18)
⁓ Yeah, that's helpful. I think that's a good point to make because you have to find a way to keep the motivation. I like the part about helping them find their next role. I find a lot of companies be very vindictive about somebody leaving. like, hey, man, it's not the right fit anymore, so don't hold it against them. Just help them out if you can.

Matt Ellis (44:35)
You know what?

I've seen so much stuff that is just like, it's so we do not own our people. And I think this is the weird thing that companies do. And see, was like signing non-competes. Okay. Like I can understand it for an executive. you know, there's probably a handful of organizations that we need some roll off time and some space for example. But, you know, I actually have, I remember talking with a competitor. was linked in with a couple of his employees. said, don't LinkedIn, don't LinkedIn with my employees. And I'm like,

Couple of things here. You should link in, if I were you, you would be linking in with every single one of my employees. You should be knowing everything that goes on is best to your ability. And LinkedIn is just one really good metrics to do that, way to do that. Secondly, like that's not your call, right? If the employee has to accept the request, don't unilaterally, right? Get the right to link in with you, you have to accept it coming from me. So do you tell, what else will you tell that employee they can or cannot do?

Silas Mähner (45:08)
Yeah.

Matt Ellis (45:34)
⁓ with their career, with their destiny, with their goals. And I think that that's just like, there's some places at Measurable, we won't go. We do not own our people. They participate as colleagues with us in a goal. ⁓ If they wanna go work somewhere else, the best thing we can do is say, we wish you well, we high five you, and your success is ours as well. That's why we have great alumni at our company, because it's like they get that we helped them. ⁓ And even if it didn't work out with us.

Silas Mähner (45:54)
Mm-hmm.

⁓ Now, this point about not controlling or not owning your employees is super important. I oftentimes find that people in sustainability, it's obviously closely related to ESG metrics. And a lot of people don't get this, right? That we have to build a more equitable workplace in general. And a lot of that comes to the kind of shifting the way companies and corporations view their human capital is the word they use. I really don't like that word because it treats them as if it's just an asset that you kind of...

Matt Ellis (46:04)
⁓ then hopefully it works out with someone else and we're proud of that.

Silas Mähner (46:33)
redirect or however you like. It's got to be a partnership no matter how big you are. So I appreciate your take there. ⁓ Maybe one last thing on the talent piece is generally speaking, where have you found a lot of your best talent from? Do they come from any particular industry? I'm just curious, what kind of companies? Is it mostly real estate, technology, cetera?

Matt Ellis (46:52)
⁓ I think we've looked all over, right? I think there was a period in time when we thought we should be hiring more from like established tech firms, right? Like an Oracle or Amazon. our CTPO, relatively new hire for us, Chief Technology and Product Officer, we combine those two roles. ⁓ In fact came from Amazon. It's a great, great, very successful career there. ⁓ So we do do that. And that is the thing. And I think

depending on the function, the business, ⁓ that makes sense. But where else would we look? For sure in real estate, right? Do you look like and come from the place that your customers are ⁓ critically important? So I refer to my own experience, our president, Maureen Waters, served a long tour of duty at Cushman and Wakefield, for example. ⁓ And that's not unusual for us. Sandra, who you mentioned, CBRE, right?

Silas Mähner (47:47)
Mm-hmm.

Matt Ellis (47:50)
So I think real estate is a really smart place to go. Interestingly on sustainability, ⁓ maybe more on the product function, right? Where you wanna have some serious subject matter expertise around carbon accounting or compliance and reporting. ⁓ But the rest of the business, I think it's really healthy to look to not just within the sustainability wing, some other places.

Silas Mähner (48:17)
Yeah, that makes a lot of sense. And then I guess we can start wrapping things up here. We're running out of time, unfortunately. I really enjoy this. I could talk to you about talent all day long, especially if people have built big companies. But where are you seeing, I guess, any new trends developing, any core things that you're keeping an eye on, whether it's related specifically to sustainability, real estate or whatever, anything that's really kind of fascinating and catching your eye recently?

Matt Ellis (48:41)
Any new trends developing?

Silas Mähner (48:42)
Mm-hmm.

Matt Ellis (48:46)
Now I gotta put my mic back on.

⁓ You know, I think that the, I think there's a lane wide open ⁓ that there's an inevitable pull towards, which is around kind of source of truth and objectivity of sustainability data. And then the ability to

exchange that information. I think that trend is basically summarized by saying the sustainability movement and value proposition is not something any single company delivers, but it's delivered more in a greater than a sum of its parts fashion. I don't know that that's true in other industries or segments, but I think in sustainability, because it's so horizontal, it's used in so many different aspects of the real estate experience.

It tells you that you have to have all these other actors engaged and that we have a very specific role, which is to make the data available to them, ensure it's high quality, and then set ⁓ a really insanely good, ⁓ awesomely compelling reason to get involved with us as a partner and a source of truth for that data. So that trend, I predict, is going to be like the defining

⁓ one of what comes next in sustainability versus say like building a software company, this merely acquire it and report it. It'll be much more about how do we share it? How do we agree on it and then share it so we can transact better? So it's more about, I think, business model and incentives. I do not think we have that right ⁓ in our industry yet. ⁓ Obviously, we could talk all day long about things like

AI or we could talk about renewables and on-site and think there's a lot of exciting stuff there too. But I think the biggest one is we have the tools, we have the value, we need to realign on the value exchange and the equation of that. And that's more of a business model decision than anything else.

Silas Mähner (50:59)
⁓ And so does this

have anything to do with also the thing you mentioned earlier where ⁓ people are speaking essentially different languages and different silos of the real estate market? Do you foresee a future where NaeReach or something is going to come in and say, we need to get everybody together to just do this one way so that it's not confusing anymore?

Matt Ellis (51:20)
That effort is long standing. ⁓ isn't there a Doonesbury cartoon on this one, right? Which is like, there's too many standards. So someone who events standard rule them all, then there's yet more standards. ⁓ I think we actually totally suffer from that in our industry. How many different working groups and standards and reporting regimes and benchmarks, and so do we really need here? ⁓ So I'll put that one aside.

Silas Mähner (51:27)
I'm not sure.

Yeah.

Mm.

At

some point you just need somebody to take a big lever and say, all right, we're doing it my way and you got to do it and you got to follow me. I feel like that's what usually happens.

Matt Ellis (51:52)
And you're gonna do that, but you're do that in the way that I think I just described,

which is like, all right, fine. I will give you an overwhelming incentive and reason to do it my way, like carrot, not stick, right? And we have some really exciting ideas in our business about how to do that. So stay tuned for more. But that's, know, that's the bottom line I think is in our industry and our segment of sustainability and real estate, I think that the,

The most exciting thing to do is realign on the value and you can do that using your business model. It's not a feature or a function thing. There's no magic button there, but there is something close to magical I think that we can do when you consider some new business models and new shared value creation.

Silas Mähner (52:44)
Yeah. Now, I appreciate that. think some of the most interesting climate tech companies that seem to succeed is not always the technology. Technology is just some part of it, but it's usually business model and incentive, right? If you look at all of the major, know, biggest entrepreneurs of history, they've all had some mechanism that allowed the customers to pull their product out of their hands faster than they could even produce it. So, awesome, man. Well, this has been a pleasure. I'm definitely glad to have you on again in the future. I think this is zoomed by.

Matt Ellis (52:56)
Exactly.

Exactly.

You got it.

Silas Mähner (53:11)
But I appreciate you coming on and looking forward to seeing what you guys continue to achieve. Thanks so much.

Matt Ellis (53:16)
Silas, thanks for having me here.